canadas catch 22 state of canada us relations in 2014
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8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Canadarsquos
Catch-22
Te State of
Canada-US
Relations
in 2014
by Alexander Moensand Alex Bartos
January 2014
1974 - 201
Y E A R
40
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January 2014
Canadarsquos Catch-983090983090 The State of Canada-US Relations in 983090983088983089983092
by Alexander Moens and Alex Bartos
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fraserinstituteorg
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fraserinstituteorg i
Contents
Executive summary iii
Bilateral trade relations 1
Trade and regulatory barriersdisputes 12
State of the border and regulatory cooperation 18
Canadian and American public perceptions 24
US policy uncertainty 27
Trade diversification 30
Conclusion the bilateral and diversification agenda 39
References 41
About the authors 49
Acknowledgments 50
Publishing information 51
Supporting the Fraser Institute 52
Purpose funding amp independence 53
About the Fraser Institute 54
Editorial Advisory Board 55
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Executive summary
Economic and political relations between Canada and the United States
our most important foreign relationship have worsened since the Fraser
Institutersquos previous report on the state of Canada-US relations Skating on
Tin Ice (Moens 983090983088983089983088) Te recovery of the US economy after the financial
crash in 983090983088983088983096 has been slow Te long-term uncertainty in US budget politics
and public debt resolution remains and the concomitant policy instabilitymdash
as we first noted in US Election 983090983088983089983090 Implications for Canada (Moens and
Clemens 983090983088983089983091)mdashcontinues to put a drag on economic growth Te across-
the-board budget cuts that took effect on January 983089 983090983088983089983091 better known as
sequestration offer a ray of light in the present context as they have imposed
cuts on spending of $983096983092 billion in both 983090983088983089983091 and 983090983088983089983092
Canadian merchandise exports to the United States have weakened
in relative terms At the same time there is not enough Canadian export
diversification to other destinations to make up this relative loss Te natural
resources component of Canadian exports is the only major growing segment
of overall trade In both merchandise and services trade the post-983090983088983088983095 per-
iod shows Canada is losing in trade competitiveness in relation to the United
States Te negative trend in trade competitiveness in services is even big-
ger than in merchandise trade Te relative loss of trade competitiveness in
our relationship may be a surprise to many Canadians who believe Canada
is simply doing better than the United States
Canadarsquos weakening competitiveness vis-agrave-vis the United States is
occurring at the same time as political relations at the top are in a slump
Te main sector in US-bound trade showing growth in the last decade crude
oil products is also the one facing most political interference from US deci-
sion makers Te six-year delay in the international permit for KXL to cross
the Canada-USA border is without precedent in our bilateral relations Atthe same time the US mandatory country-of-origin labeling rule which
took effect in 983090983088983088983097 has severely damaged the decades-old and deeply inte-
grated supply chain in beef and pork costing Canadian producers some $983089
billion per year ldquoBuy Americanrdquo in the public procurement sector remains a
latent threat to bilateral relations While American trade barriers have risen
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
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983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
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The state of Canada-US relations in 983090983088983089983092 983093
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
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The state of Canada-US relations in 983090983088983089983092 983095
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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January 2014
Canadarsquos Catch-983090983090 The State of Canada-US Relations in 983090983088983089983092
by Alexander Moens and Alex Bartos
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 362
fraserinstituteorg
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 462
fraserinstituteorg i
Contents
Executive summary iii
Bilateral trade relations 1
Trade and regulatory barriersdisputes 12
State of the border and regulatory cooperation 18
Canadian and American public perceptions 24
US policy uncertainty 27
Trade diversification 30
Conclusion the bilateral and diversification agenda 39
References 41
About the authors 49
Acknowledgments 50
Publishing information 51
Supporting the Fraser Institute 52
Purpose funding amp independence 53
About the Fraser Institute 54
Editorial Advisory Board 55
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg iii
Executive summary
Economic and political relations between Canada and the United States
our most important foreign relationship have worsened since the Fraser
Institutersquos previous report on the state of Canada-US relations Skating on
Tin Ice (Moens 983090983088983089983088) Te recovery of the US economy after the financial
crash in 983090983088983088983096 has been slow Te long-term uncertainty in US budget politics
and public debt resolution remains and the concomitant policy instabilitymdash
as we first noted in US Election 983090983088983089983090 Implications for Canada (Moens and
Clemens 983090983088983089983091)mdashcontinues to put a drag on economic growth Te across-
the-board budget cuts that took effect on January 983089 983090983088983089983091 better known as
sequestration offer a ray of light in the present context as they have imposed
cuts on spending of $983096983092 billion in both 983090983088983089983091 and 983090983088983089983092
Canadian merchandise exports to the United States have weakened
in relative terms At the same time there is not enough Canadian export
diversification to other destinations to make up this relative loss Te natural
resources component of Canadian exports is the only major growing segment
of overall trade In both merchandise and services trade the post-983090983088983088983095 per-
iod shows Canada is losing in trade competitiveness in relation to the United
States Te negative trend in trade competitiveness in services is even big-
ger than in merchandise trade Te relative loss of trade competitiveness in
our relationship may be a surprise to many Canadians who believe Canada
is simply doing better than the United States
Canadarsquos weakening competitiveness vis-agrave-vis the United States is
occurring at the same time as political relations at the top are in a slump
Te main sector in US-bound trade showing growth in the last decade crude
oil products is also the one facing most political interference from US deci-
sion makers Te six-year delay in the international permit for KXL to cross
the Canada-USA border is without precedent in our bilateral relations Atthe same time the US mandatory country-of-origin labeling rule which
took effect in 983090983088983088983097 has severely damaged the decades-old and deeply inte-
grated supply chain in beef and pork costing Canadian producers some $983089
billion per year ldquoBuy Americanrdquo in the public procurement sector remains a
latent threat to bilateral relations While American trade barriers have risen
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091
fraserinstituteorg
Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
fraserinstituteorg
Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4362
983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4462
The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 462
fraserinstituteorg i
Contents
Executive summary iii
Bilateral trade relations 1
Trade and regulatory barriersdisputes 12
State of the border and regulatory cooperation 18
Canadian and American public perceptions 24
US policy uncertainty 27
Trade diversification 30
Conclusion the bilateral and diversification agenda 39
References 41
About the authors 49
Acknowledgments 50
Publishing information 51
Supporting the Fraser Institute 52
Purpose funding amp independence 53
About the Fraser Institute 54
Editorial Advisory Board 55
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
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fraserinstituteorg iii
Executive summary
Economic and political relations between Canada and the United States
our most important foreign relationship have worsened since the Fraser
Institutersquos previous report on the state of Canada-US relations Skating on
Tin Ice (Moens 983090983088983089983088) Te recovery of the US economy after the financial
crash in 983090983088983088983096 has been slow Te long-term uncertainty in US budget politics
and public debt resolution remains and the concomitant policy instabilitymdash
as we first noted in US Election 983090983088983089983090 Implications for Canada (Moens and
Clemens 983090983088983089983091)mdashcontinues to put a drag on economic growth Te across-
the-board budget cuts that took effect on January 983089 983090983088983089983091 better known as
sequestration offer a ray of light in the present context as they have imposed
cuts on spending of $983096983092 billion in both 983090983088983089983091 and 983090983088983089983092
Canadian merchandise exports to the United States have weakened
in relative terms At the same time there is not enough Canadian export
diversification to other destinations to make up this relative loss Te natural
resources component of Canadian exports is the only major growing segment
of overall trade In both merchandise and services trade the post-983090983088983088983095 per-
iod shows Canada is losing in trade competitiveness in relation to the United
States Te negative trend in trade competitiveness in services is even big-
ger than in merchandise trade Te relative loss of trade competitiveness in
our relationship may be a surprise to many Canadians who believe Canada
is simply doing better than the United States
Canadarsquos weakening competitiveness vis-agrave-vis the United States is
occurring at the same time as political relations at the top are in a slump
Te main sector in US-bound trade showing growth in the last decade crude
oil products is also the one facing most political interference from US deci-
sion makers Te six-year delay in the international permit for KXL to cross
the Canada-USA border is without precedent in our bilateral relations Atthe same time the US mandatory country-of-origin labeling rule which
took effect in 983090983088983088983097 has severely damaged the decades-old and deeply inte-
grated supply chain in beef and pork costing Canadian producers some $983089
billion per year ldquoBuy Americanrdquo in the public procurement sector remains a
latent threat to bilateral relations While American trade barriers have risen
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
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A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
fraserinstituteorg
Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
fraserinstituteorg
-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg i
Contents
Executive summary iii
Bilateral trade relations 1
Trade and regulatory barriersdisputes 12
State of the border and regulatory cooperation 18
Canadian and American public perceptions 24
US policy uncertainty 27
Trade diversification 30
Conclusion the bilateral and diversification agenda 39
References 41
About the authors 49
Acknowledgments 50
Publishing information 51
Supporting the Fraser Institute 52
Purpose funding amp independence 53
About the Fraser Institute 54
Editorial Advisory Board 55
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fraserinstituteorg
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fraserinstituteorg iii
Executive summary
Economic and political relations between Canada and the United States
our most important foreign relationship have worsened since the Fraser
Institutersquos previous report on the state of Canada-US relations Skating on
Tin Ice (Moens 983090983088983089983088) Te recovery of the US economy after the financial
crash in 983090983088983088983096 has been slow Te long-term uncertainty in US budget politics
and public debt resolution remains and the concomitant policy instabilitymdash
as we first noted in US Election 983090983088983089983090 Implications for Canada (Moens and
Clemens 983090983088983089983091)mdashcontinues to put a drag on economic growth Te across-
the-board budget cuts that took effect on January 983089 983090983088983089983091 better known as
sequestration offer a ray of light in the present context as they have imposed
cuts on spending of $983096983092 billion in both 983090983088983089983091 and 983090983088983089983092
Canadian merchandise exports to the United States have weakened
in relative terms At the same time there is not enough Canadian export
diversification to other destinations to make up this relative loss Te natural
resources component of Canadian exports is the only major growing segment
of overall trade In both merchandise and services trade the post-983090983088983088983095 per-
iod shows Canada is losing in trade competitiveness in relation to the United
States Te negative trend in trade competitiveness in services is even big-
ger than in merchandise trade Te relative loss of trade competitiveness in
our relationship may be a surprise to many Canadians who believe Canada
is simply doing better than the United States
Canadarsquos weakening competitiveness vis-agrave-vis the United States is
occurring at the same time as political relations at the top are in a slump
Te main sector in US-bound trade showing growth in the last decade crude
oil products is also the one facing most political interference from US deci-
sion makers Te six-year delay in the international permit for KXL to cross
the Canada-USA border is without precedent in our bilateral relations Atthe same time the US mandatory country-of-origin labeling rule which
took effect in 983090983088983088983097 has severely damaged the decades-old and deeply inte-
grated supply chain in beef and pork costing Canadian producers some $983089
billion per year ldquoBuy Americanrdquo in the public procurement sector remains a
latent threat to bilateral relations While American trade barriers have risen
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
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983090 The state of Canada-US relations in 983090983088983089983092
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A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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983092 The state of Canada-US relations in 983090983088983089983092
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-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
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The state of Canada-US relations in 983090983088983089983092 983093
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
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Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
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The state of Canada-US relations in 983090983088983089983092 983095
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
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075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
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0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 662
fraserinstituteorg iii
Executive summary
Economic and political relations between Canada and the United States
our most important foreign relationship have worsened since the Fraser
Institutersquos previous report on the state of Canada-US relations Skating on
Tin Ice (Moens 983090983088983089983088) Te recovery of the US economy after the financial
crash in 983090983088983088983096 has been slow Te long-term uncertainty in US budget politics
and public debt resolution remains and the concomitant policy instabilitymdash
as we first noted in US Election 983090983088983089983090 Implications for Canada (Moens and
Clemens 983090983088983089983091)mdashcontinues to put a drag on economic growth Te across-
the-board budget cuts that took effect on January 983089 983090983088983089983091 better known as
sequestration offer a ray of light in the present context as they have imposed
cuts on spending of $983096983092 billion in both 983090983088983089983091 and 983090983088983089983092
Canadian merchandise exports to the United States have weakened
in relative terms At the same time there is not enough Canadian export
diversification to other destinations to make up this relative loss Te natural
resources component of Canadian exports is the only major growing segment
of overall trade In both merchandise and services trade the post-983090983088983088983095 per-
iod shows Canada is losing in trade competitiveness in relation to the United
States Te negative trend in trade competitiveness in services is even big-
ger than in merchandise trade Te relative loss of trade competitiveness in
our relationship may be a surprise to many Canadians who believe Canada
is simply doing better than the United States
Canadarsquos weakening competitiveness vis-agrave-vis the United States is
occurring at the same time as political relations at the top are in a slump
Te main sector in US-bound trade showing growth in the last decade crude
oil products is also the one facing most political interference from US deci-
sion makers Te six-year delay in the international permit for KXL to cross
the Canada-USA border is without precedent in our bilateral relations Atthe same time the US mandatory country-of-origin labeling rule which
took effect in 983090983088983088983097 has severely damaged the decades-old and deeply inte-
grated supply chain in beef and pork costing Canadian producers some $983089
billion per year ldquoBuy Americanrdquo in the public procurement sector remains a
latent threat to bilateral relations While American trade barriers have risen
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
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983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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983092 The state of Canada-US relations in 983090983088983089983092
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-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
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The state of Canada-US relations in 983090983088983089983092 983093
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
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The state of Canada-US relations in 983090983088983089983092 983095
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
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075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
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Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4262
The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4362
983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4462
The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
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Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg iii
Executive summary
Economic and political relations between Canada and the United States
our most important foreign relationship have worsened since the Fraser
Institutersquos previous report on the state of Canada-US relations Skating on
Tin Ice (Moens 983090983088983089983088) Te recovery of the US economy after the financial
crash in 983090983088983088983096 has been slow Te long-term uncertainty in US budget politics
and public debt resolution remains and the concomitant policy instabilitymdash
as we first noted in US Election 983090983088983089983090 Implications for Canada (Moens and
Clemens 983090983088983089983091)mdashcontinues to put a drag on economic growth Te across-
the-board budget cuts that took effect on January 983089 983090983088983089983091 better known as
sequestration offer a ray of light in the present context as they have imposed
cuts on spending of $983096983092 billion in both 983090983088983089983091 and 983090983088983089983092
Canadian merchandise exports to the United States have weakened
in relative terms At the same time there is not enough Canadian export
diversification to other destinations to make up this relative loss Te natural
resources component of Canadian exports is the only major growing segment
of overall trade In both merchandise and services trade the post-983090983088983088983095 per-
iod shows Canada is losing in trade competitiveness in relation to the United
States Te negative trend in trade competitiveness in services is even big-
ger than in merchandise trade Te relative loss of trade competitiveness in
our relationship may be a surprise to many Canadians who believe Canada
is simply doing better than the United States
Canadarsquos weakening competitiveness vis-agrave-vis the United States is
occurring at the same time as political relations at the top are in a slump
Te main sector in US-bound trade showing growth in the last decade crude
oil products is also the one facing most political interference from US deci-
sion makers Te six-year delay in the international permit for KXL to cross
the Canada-USA border is without precedent in our bilateral relations Atthe same time the US mandatory country-of-origin labeling rule which
took effect in 983090983088983088983097 has severely damaged the decades-old and deeply inte-
grated supply chain in beef and pork costing Canadian producers some $983089
billion per year ldquoBuy Americanrdquo in the public procurement sector remains a
latent threat to bilateral relations While American trade barriers have risen
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Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090 The state of Canada-US relations in 983090983088983089983092
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A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
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-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
fraserinstituteorg
Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
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lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
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lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
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publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
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Sonja Bata
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Jack Pirie
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
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Te Institute is a non-profit organization Our activities are funded
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All research is subject to rigorous review by external experts and is
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Te opinions expressed by the authors are those of the individuals
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implies that the Fraser Institute its trustees or staff are in favour of or op-
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As a healthy part of public discussion among fellow citizens who de-
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
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983090 The state of Canada-US relations in 983090983088983089983092
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A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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983092 The state of Canada-US relations in 983090983088983089983092
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-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
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Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983089
Bilateral trade relations
Merchandise trade
Tere is a significant decline in both exports and imports from 983090983088983088983096 to 983090983088983088983097
as a result of the US recession (table 983089) Te sharpest decline is in Canadian
merchandise exports to the US which decreased by 983090983095 percent in 983090983088983088983097 and
still have not recovered to the 983090983088983088983096 level in 983090983088983089983090 Canadian merchandise
imports from the US on the other hand did not fall as sharplymdash983089983094 percent in
983090983088983088983097mdashand in 983090983088983089983090 are only slightly below the 983090983088983088983096 number Tus on balance
Canadian exports to the US have suffered significantly more from the reces-
sion than American exports to Canada (figures 983089 983090) Given this re-balancing
Canadarsquos merchandise trade balance surplus with the USA has been virtu-
ally cut in half (983092983094 percent) from $983095983095 billion in 983090983088983088983096 to $983091983093 billion in 983090983088983089983090983089
Te traditionally large gap between merchandise exports and imports
between Canada and its largest trading partner have shrunk substantially As
a result Canadarsquos trade balance with the world has declined from $983092983089 billion
in 983090983088983088983096 to a deficit of $983089983088 billion in 983090983088983089983090 Te monthly import and export
numbers in 983090983088983089983091 show a continuation of this trend
A noticeable trend in Canada in the last 983095 years reveals that less GDP is
derived from trade (and thus more from Canadarsquos domestic market) while in
the United States the trade versus domestic market share of GDP is on a ris-
ing trend (table 983090) When we examine the US share of Canadarsquos total exports
and imports over a longer period (983089983097983097983091ndash983090983088983089983090) we notice the overall down-
ward trend (figures 983091 983092) Te main causal factors are the higher value of the
Canadian dollar the post-983090983088983088983096 slump in US demand and a certain amount
of diversification in Canadarsquos trade as well as stronger relative growth inCanadarsquos domestic market
1048625 All figures are in real Canadian dollars unless otherwise noted
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091
fraserinstituteorg
Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
fraserinstituteorg
Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4362
983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4462
The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
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About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
A breakdown of the top export and import sectors in Canada-US trade
shows that the traditionally strong machinery and automotive sectors are
holding well in terms of US exports to Canada but the same sector is weaker
on the Canadian side Te gains on our side are in minerals and energy prod-
ucts (tables 983091 983092) Te slow decline in Canadian exports of manufactured prod-
ucts suggests a weakening on Canadarsquos side in the integrated supply-chain in
this sector Lower productivity and border costs may well play a role
Table 983089 Canadian merchandise trade 983090983088983088983095ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2007 2008 2009 2010 2011 2012
Total exports 41380 42705 32099 34675 38099 38006
Exports to US 31795 32331 23610 25332 27517 27809
Total imports 37291 38877 32691 35508 38036 38993
Imports from US 24215 24666 20641 22312 23475 24360
Total balance 4089 3827 -592 -833 063 -987
Balance with US 7579 7666 2969 3020 4042 3450
Note On a balance of payments basis
Source Statistics Canada (2013d)
15
20
25
30
35
2 0 1 3 - 0 5
2 0 1 3 - 0 1
2 0 1 2 - 0 9
2 0 1 2 - 0 5
2 0 1 2 - 0 1
2 0 1 1 - 0 9
2 0 1 1 - 0 5
2 0 1 1 - 0 1
2 0 1 0 - 0 9
2 0 1 0 - 0 5
2 0 1 0 - 0 1
2 0 0 9 - 0 9
2 0 0 9 - 0 5
2 0 0 9 - 0 1
2 0 0 8 - 0 9
2 0 0 8 - 0 5
2 0 0 8 - 0 1
2 0 0 7 - 0 9
2 0 0 7 - 0 5
2 0 0 7 - 0 1
Import Export
2 0 0 2 C A $ b i l l i o n s
Figure Canadarsquos merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
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-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
fraserinstituteorg
relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
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An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
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0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
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Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091
fraserinstituteorg
Table 983090 Merchandise trade as a of GDP 983090983088983088983093ndash983090983088983089983090 (current US$)
2005 2006 2007 2008 2009 2010 2011 2012
Canada 602 584 569 583 483 501 515 510
Growth 02 -30 -26 25 -172 37 28 -10
US 210 221 227 243 191 225 250 248
Growth 61 52 27 70 -214 178 111 -08
Source The World Bank (2013a)
0
1
2
3
4
5
6
7
8
9
2 0 1 3
- 0 5
2 0 1 3
- 0 1
2 0 1 2
- 0 9
2 0 1 2
- 0 5
2 0 1 2
- 0 1
2 0 1 1
- 0 9
2 0 1 1
- 0 5
2 0 1 1
- 0 1
2 0 1 0
- 0 9
2 0 1 0
- 0 5
2 0 1 0
- 0 1
2 0 0 9
- 0 9
2 0 0 9
- 0 5
2 0 0 9
- 0 1
2 0 0 8
- 0 9
2 0 0 8
- 0 5
2 0 0 8
- 0 1
2 0 0 7
- 0 9
2 0 0 7
- 0 5
2 0 0 7
- 0 1
2 0 0 2 C A $ b i l l i o n s
Figure Canada-US net merchandise trade (monthly) ndash
Source Statistics Canada (2013c) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
fraserinstituteorg
Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
-5
-4
-3
-2
-1
0
1
2
3
2012201120102009200820072006200520042003200220012000
G r o
w t h ( )
Figure GrowthUS share of Canadarsquos annual merchandise trade ()
ndash
Source Industry Canada (2013b) calculations by authors
Import Export
45
50
55
60
65
70
75
80
85
90
2011200920072005200320011999199719951993
Import Export
Figure US share of Canadarsquos annual merchandise trade () ndash
Source Industry Canada (2013b)
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The state of Canada-US relations in 983090983088983089983092 983093
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
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983094 The state of Canada-US relations in 983090983088983089983092
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Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
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The state of Canada-US relations in 983090983088983089983092 983095
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093
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Table 983091 Top sectors for Canadian merchandise exports to the US 983090983088983089983090
Industry Exports
2002 CA$ bi llions Percentage
Mineral products 886 318
Products of chemical or allied industries 163 59
Plastics and related articles 118 43
Base metals and articles of base metals 200 72
Machinery mechanical appliances electrical equipment and related articles 276 99
Vehicles aircraft vessels and associated transport equipment 530 191
Note On a customs basis
Source Statistics Canada (2013a)
Table 983092 Top industries for Canadian merchandise imports from the US 983090983088983089983090
Industry Imports
2002 CA$ bi llions Percentage
Mineral products 163 85
Products of chemical or allied industries 171 89
Plastics and related articles 127 66
Base metals and articles of base metals 158 82
Machinery mechanical appliances electrical equipment and related articles 413 215
Vehicles aircraft vessels and associated transport equipment 413 215
Note On a customs basis
Source Statistics Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
fraserinstituteorg
-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
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0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983090 The state of Canada-US relations in 983090983088983089983092
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Trade in services
As a share of overall bilateral trade trade in services is growing gradually otal
bilateral services trade in 983090983088983089983088 amounted to 983089983096 percent of bilateral merchan-
dise trade It was 983089983093 percent in 983090983088983088983095983090 Te United States is by far the largest
trading partner in Canadarsquos international trade in services rade with the
US is nearly ten times the amount with the next largest partner the United
Kingdom But unlike merchandise trade the value of non-US services trade
is nearly half (983092983092 percent in 983090983088983089983088) of that with the USA (table 983093) In other
words there is more diversification from the US market in services than in
merchandise983091
Te trend reveals rising competitiveness on the US side (and non-USA)
as Canadian imports are growing considerably while Canadian exports are
stagnant resulting in a growing services trade deficit (figure 983093)
Bilateral trade in services was not impacted by the US recession as
merchandise trade was otal volume of trade is slightly up in the three years
after 983090983088983088983095 (figure 983094) Most of this gain is from growth in Canadian imports
from the US (and from non-US) while Canadian exports to the USA are
slightly down
Given that there is no growth in Americans traveling to Canada during
this time period (as we will show later) the relative strength of US exports vis-
agrave-vis Canadian exports appears to lie in the commercial sector (tables 983094 983095)
In conclusion in both merchandise and services trade the post 983090983088983088983095
period shows that Canada is relatively losing in trade competitiveness in rela-
tion to the United States Te relative loss of trade competitiveness in our
relationship may be a surprise to many Canadians who believe Canada has
simply been doing better than the US since 983090983088983088983096 Te lsquodoing betterrsquo part may
apply to domestic economic activity but not to external trade
1048626 Data on trade in services is not as recent as merchandise trade
1048627 op export destinations in 983090983088983089983088 after the USA are the UK France and Germany op
importers to Canada in 983090983088983089983088 after the USA include UK Hong Kong (China) France
Germany and Mexico Te case with importers to Canada is similar to that with export-
ing countries Imports from the UK make up roughly 983089983088 percent that of imports from the
US Imports from Hong Kong are 983093983089 percent that from the UK with France at 983092983090 percent
and both Germany and Mexico rest at roughly 983091983096 percent each
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
fraserinstituteorg
Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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The state of Canada-US relations in 983090983088983089983092 983097
fraserinstituteorg
Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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983091983096 The state of Canada-US relations in 983090983088983089983092
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
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the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
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Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
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Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
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no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
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internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
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Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983095
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Table 983093 Services trade between Canada and the US 983090983088983088983093ndash983090983088983089983088 (983090983088983088983090 CA$ billions)
2005 2006 2007 2008 2009 2010
Exports to USA 3988 3815 3834 3966 3718 3700
Imports from USA 4358 4395 4544 4833 4783 4960
Trade balance with USA -370 -580 -710 -866 -1065 -1260
Trade balance with USA -443 -707 -847 -985 -1240 -1455
Exports to non-USA 2832 3080 2985 3052 3142 3102
Imports from non-USA 3022 3187 3380 3518 3496 3722
Trade balance with non-USA -189 -108 -395 -466 -354 -620
Trade balance with non-USA -323 -172 -621 -710 -540 -909
Total services exports 6820 6894 6819 7018 6860 6802
Total services imports 7379 7582 7924 8350 8279 8682
Total trade balance -559 -688 -1105 -1333 -1419 -1880
Total trade balance -394 -475 -750 -867 -937 -1214
Bilateral (X+I) USA 8346 8210 8378 8799 8589 8660
Bilateral (X+I) non-USA 5854 6267 6365 6569 6551 6824
Bilateral (X+I) total 14200 14477 14742 15368 15140 15484
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983096 The state of Canada-US relations in 983090983088983089983092
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80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4262
The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4462
The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
80
81
82
83
84
85
86
87
88
89
90
201020092008200720062005
2 0
0 2 C A $ b i l l i o n s
Figure Canada-US net services trade ndash
Source Foreign Affairs Trade and Development Canada (2013a)
-20
-16
-12
-8
-4
0
201020092008200720062005
Trade balance with USA Total trade balance
Figure Canadarsquos trade deficit with US and the world ndash
Source Foreign Affairs Trade and Development Canada (2013a)
2 0 0 2 C A $ b i l
l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983089
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-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
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The state of Canada-US relations in 983090983088983089983092 983089983091
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relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4262
The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983097
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Table 983094 Top categories for service trade exports Canada-World 983090983088983089983090
Category Subcategory Exports
2002 CA$ bi llions Percentage
Government services 13 19
Travel services 143 207
Personal travel 119 172
Transportation services 111 161
Air transport 52 76
Commercial services 424 614
Financial services 57 82
Computer and information services 64 93
Intellectual property use 31 44
Management services 90 130
Research and development 33 47
Architectural engineering 39 57
Source Foreign Affairs Trade and Development Canada (2013a)
Table 983095 Top categories for service trade imports Canada-World 983090983088983089983090
Category Subcategory Imports
2002 CA$ billions Percentage
Government services 11 12
Travel services 288 323
Personal travel 253 284
Transportation services 195 219
Water transport 82 92
Air transport 84 95
Commercial services 396 446
Insurance services 44 50
Financial services 44 50
Intellectual property use 89 100
Management services 75 84
Source Foreign Affairs Trade and Development Canada (2013a)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983089
fraserinstituteorg
-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983091
fraserinstituteorg
relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
075
080
085
090
095
100
105
2 0 1 3
- 0 7
2 0 1 3
- 0 1
2 0 1 2
- 0 7
2 0 1 2
- 0 1
2 0 1 1
- 0 7
2 0 1 1
- 0 1
2 0 1 0
- 0 7
2 0 1 0
- 0 1
2 0 0 9
- 0 7
2 0 0 9
- 0 1
2 0 0 8
- 0 7
2 0 0 8
- 0 1
2 0 0 7
- 0 7
2 0 0 7
- 0 1
Figure CanadaUS dollar exchange rate ndash
Source Bank of Canada (2013b)
C A U S e x c h a n g e r a t e
Dollar value and productivity trends
Te first factor to consider regarding Canadarsquos trade competitiveness vis-agrave-vis
the United States is the value of the Canadian dollar Te substantial appre-
ciation of the Canadian dollar against the US dollar that began in the early
983090983088983088983088s has stabilized at a much higher average value of the loonie ( figure 983095)
As is well documented such exchange rate appreciation tends to have a strong
effect on current account balances as exports decline (Kappler et al 983090983088983089983089)
A growing account deficit will likely push the value of the Canadian dollar
downward in the longer term and thus offer some remedy
ProductivityOf more concern to Canadians should be the data indicating that Canadian
labour productivity rates are lagging those in the United States (figures 983096 983097)
One would expect that Canadarsquos higher dollar has provided industry in recent
years with an opportunity to improve productivity as imported machinery
and technology would be available at a lower price However Canadarsquos pro-
ductivity rate of growth is modest and in 983090983088983089983090 dips into negative territory
again
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983089
fraserinstituteorg
-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983091
fraserinstituteorg
relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983089
fraserinstituteorg
-1
0
1
2
3
20122011201020092008
Canada US
Figure Canada and US rates of output productivity growth ()
ndash
Source Statistics Canada (2013g)
R a t e o f p r o d u c t i v i t y g r o
w t h ( )
-10
-5
0
5
20122011201020092008
Labour productivity (Canada) Real GDP (Canada) Hours worked (Canada)
Labour productivity (US) Real GDP (US) Hours worked (US)
Figure Real US-Canadian output and hours worked () ndash
Source Statistics Canada (2013g)
A n n u a l c
h a n g e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983091
fraserinstituteorg
relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
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Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983090 fraserinstituteorg
Trade and regulatory barriersdisputes
Table 983096 provides a synopsis of the major trade disputesbarriers that have
played a role in bilateral relations in the last five years and that are pertinent
for the 983090983088983089983092 period (pages 983089983094-983089983095) Te two large disputesmdashKeystone XL and
Mandatory Country-of-Origin Labeling (MCOOL) on red meatmdashare more
ominous than they may seem First both in crude oil products and in cattle
and hogs the United States is unilaterally disrupting or dismantling a well-
established integrated sector Canada has started attempts to diversify its oil
transportation structure including more rail and new pipeline routes But
as all proposed alternative pipelines have shown the alternatives are contro-
versial and at best years away from making a difference Meanwhile there is
considerable risk in putting too much crude oil on rail as its accident rates
are higher than pipe
Canadian threats to counter US MCOOL action with tariffs on food
products are not going to have much impact in the near future Moreover
an escalating tariff war on food products cannot be won by Canada and will
ultimately harm consumers on both sides of the border US defiance of two
WO rulings also means more uncertainty for Canadian traders
Keystone XL pipeline
Proposed in 983090983088983088983096 the Keystone XL (KXL) extension is part of a pipeline sys-
tem connecting Alberta oil sands and US mid-West and Gulf region refineries
KXL is a 983089983096983097983095 km crude oil pipeline with a capacity of 983092983094983093983088983088983088 barrels per
day (Hussain 983090983088983089983091) It is a substantial private infrastructure proposal that
will create employment and guarantee a secure energy source for the United
States (Millington and Murillo 983090983088983089983091) It is by no means a new feature in
Canada-US energy relations as a dense network of oil and electricity carri-ers cross the border at multiple points
What is unprecedented is that the permit process is now in its sixth
year and the final resolution remains uncertain (by US law a cross-border line
requires Department of State approval) If not resolved in 983090983088983089983092 the question
may well be handed over to the next president after 983090983088983089983094 Te policy uncertainty
associated with KXL approval has by far the largest impact on Canada-US trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983091
fraserinstituteorg
relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983091
fraserinstituteorg
relations Te dragged-out procedure has chilled relations Te southern leg of
KXL has been completed and the original route objection by Nebraska has been
resolved What remains ostensibly the problem is that the US administration
has identified this heavy oil as a component of its policy objective of curbing
the emission of greenhouses gasses to reduce global warming
Te impact of this pipeline delay in the 983090983095 million barrels per day (bpd)
export of Canadian oil products to the USA reverberates at various levels
Across Canada investment in mining oil and gas extraction for 983090983088983089983091 is pre-
dicted to decrease by 983090983095 percentmdashthe largest decline since the 983090983088983088983096 recession
(Statistics Canada 983090983088983089983091f) In Alberta investment is predicted to increase by
only 983088983089 percent (Statistics Canada 983090983088983089983091f) Capital investment in oil and gas
extraction has not recovered to pre-983090983088983088983096 levels (Industry Canada 983090983088983089983091a)
While the industry has become increasingly dependent on rail trans-
port to move product it is a costly alternative It can cost up to three times
as much as pipeline transport (Millington and Murillo 983090983088983089983091) and its limita-
tions are self-evident because rail movement of oil is constrained by the lim-
ited availability of rail cars In 983090983088983089983090 983089983091983088983088983088983088 bpd of heavy crude was being
transported by rail Tis is expected to rise to 983092983090983093983088983088983088 bpd by the end of
983090983088983089983092 falling short of the 983092983094983093983088983088983088 bpd which could have been moved through
KXL (Hussain 983090983088983089983091) Te forced increase in rail transport has resulted in
unintended costs for the industry a total of US$983089 billion must be invested for
new rail terminals and another US$983092ndash983093 billion for new rail cars (Lewis 983090983088983089983091)
Rail transport is both more costly and more dangerous A recent study
concluded that ldquopipeline transportation is safer than transportation by road
rail or barge as measured by incidents injuries and fatalitiesrdquo (Green amp
Furchtgott-Roth 983090983088983089983091) It is not inconceivable that another major oil acci-
dent either in Canada or the USAmdashsuch as took place in Quebec in July 983090983088983089983091
killing 983092983095 peoplemdashwould result in a moratorium on oil transport by rail with
grave consequences for Canadian producers
983090983088983088983090 Mandatory Country-of-Origin Labeling
Mandatory Country-of-Origin Labeling (MCOOL) is a provision mandated
by Congressional law and first implemented in 983090983088983088983096 Te measure imposes
strict segregation rules on American Canadian and Mexican cattle and hogs
and the subsequent slaughtering and processing of these animals to producebeef and pork products for retail sale Te stated purpose is to create labels
that indicate the origin in part or in whole of the product In effect it is a
veiled trade barrier because it gives US animals and products a competitive
advantage due to higher labeling inventory and processing costs for equiva-
lent Canadian products
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983096 Synopsis of trade disputes in Canadian-American relations in 983090983088983089983091
Dispute Impact and cost Prospect for resolution
Keystone XL Pipeline Very serious Poor
2008 proposal for a 1897
km 465000 bpd crude oilpipeline spanning fromAlberta down to Nebraska
Downward pressure on investment
Lost wages January 2012postponement is costing US $47million a day in lost wages (ConsumerEnergy Alliance 2013)
Continuation of crude oil pricediscounts due to lack of infrastructure
Costly alternative rail has emerged as atransportation alternative but can costup to three times as much as pipelinetravel (Millington and Murillo 2013)
Permit postponed twice
Resolution is not transparent
Rising risk of decision deferral past 2016
Mandatory Country-of-OriginLabelling (MCOOL)
Serious Poor
2008 CongressionalLaw mandating rulesfor segregated livestockprocessing and packagingand a labeling structure inorder to have food labelsindicate origin of product
Annual cost to Canadian beef and porksector of $1 billion
Deconstruction of a highly integratedtrilateral supply chain industry
MCOOL adds no animal health or foodsafety benefits
US has defied both WTO complaint andthe core part of the WTO Appeal ruling
2013 US reaction has been to strengthenthe discriminatory provision banning co-mingling of meats altogether
Canada plans to retaliate with tariffs butthis is a costly gambit with low chance ofsuccess
Softwood Lumber Agreement Moderate Good
In 2011 American softwoodcompanies took theirCanadian counterparts to theLondon Court of InternationalArbitration accusing themof circumventing the SLA(Foreign Affairs Trade andDevelopment Canada 2012a)
If in violation Canadian industry wouldface $380 million in penalties (TheCanadian Press 2012)
The London Court of InternationalArbitration in 2012 ruled in favor ofCanada (Foreign Affairs Trade andDevelopment Canada 2012a)
SLA was to expire in 2013 but Canadaand the USA extended it until 2015 (CBCNews 2012)
Long-term free trade in lumber needs toreplace SLA
Buy American Provision Serious Partial resolution but high risk ofrecurring Buy American legislation
2009 American Recovery andReinvestment Act
Exclusion of Canadian products andproduction sharing in US public worksprocurement
Canada-US Procurement Agreement in2010 which allowed for the purchaseof Canadian goods on seven US
infrastructure projects valued at morethan $7777000
Canada needs to seek a comprehensiveagreement in order to escape futureAmerican protectionism with allprovinces on board and compliant withthe WTO provision
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Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983093
fraserinstituteorg
Dispute Impact and cost Prospect for resolution
Canadian Wheat Board Long-term benefit Completed
Canadarsquos mandatory wheat
marketing board monopsonyended in 2011
Frequent US action against CWB in the
past will now end as wheat marketingin Canada turns fully market based
Intellectual Property Rights Moderate potential cost Partially resolved
Canada has been on theSpecial 301 Priority Watch Listby the United States TradeRepresentative since 1995
Ongoing threat of US Trade Action andlegal action
Canadian domestic complianceincluding
Strengthening data protection
Participation in Anti-counterfeiting TradeAgreement (ACTA in 2013)
Enacted the Combating CounterfeitProducts Act (2013)
Started the process of strengthening
the Copyright Act and implementingWorld Intellectual Property OrganizationInternet Treaties
In recognition of which Canada has beenremoved from the Special 301 PriorityWatch List
Prescription drugs Serious potential for trade action Indirect progress
The US complaint againstCanada
Imposing price ceilings thatshifts the cost burden of RampDto US firms
Weak protection ofintellectual property rights rethird party sales
Slow prescription drugapproval process causingreduced market access
US firms experience lost revenues andtrade action is a risk
In 2013 CETA agreement with theEuropean Union Canada agrees to givefull patent protection to new drugs fortwo years
Two-year rule may be transferable tofuture Canada-US resolution
Table 983096 continued
Canada and the United States have had a deeply integrated market in
this sector since the early 983089983097983097983088s Animal health and food safety standards have
been largely harmonized As a result highly efficient supply-chain production
methods have made this industry quite efficient However the imposition of
MCOOL has changed all that (Moens amp Leon 983090983088983089983090) Te cost differential haswidened and Canadian exports have dropped dramatically Since 983090983088983088983096 the
cattle sector has lost $983094983092983088 million per year and the hog sector has lost $983093983088983088
million a year (Te Canadian Press 983090983088983089983091a)
In 983090983088983089983090 the World rade Organization (WO) ruled in Canadarsquos favor by
concluding that MCOOL is discriminatory Te WO gave the US until May 983090983091
983090983088983089983091 to act but on that same day the USDA imposed regulatory changes that
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983090 The state of Canada-US relations in 983090983088983089983092
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983094 The state of Canada-US relations in 983090983088983089983092
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actually strengthened the provisions of MCOOL In retaliation the Canadian
government released a list of US exports to Canada that would be subjected
to tariffs and it is preparing to seek a compliance panel at the WO Until this
situation is resolved the Canadian government predicts a continuing annual
loss of $983089 billion for the Canadian red meat sector (Te Canadian Press 983090983088983089983091a)
Softwood lumber
In 983090983088983089983089 several American softwood companies took their Canadian counter-
parts to the Court of International Arbitration in London accusing them of cir-
cumventing the Softwood Lumber Agreement of 983090983088983088983094 (Foreign Affairs rade
and Development Canada 983090983088983089983090a) Te dispute centered on the accelerating pace
of lumber harvests resulting from the pine beetle infestation Te stakes were
high $983091983096983088 million in penalties should Canada lose (Te Canadian Press 983090983088983089983090)
In 983090983088983089983090 the Court of International Arbitration ruled in Canadarsquos favor
(Foreign Affairs rade and Development Canada 983090983088983089983090a) In addition while
the Softwood Lumber Agreement was set to expire in 983090983088983089983091 the Canadian
and American governments successfully negotiated an extension of the
Agreement until 983090983088983089983093 (CBC News 983090983088983089983090) Te fact remains that as long as a
large part of Canadarsquos softwood lumber is managed in terms of quotas and
the stumpage fee system US trade action is very likely
lsquoBuy Americanrsquo provision
Te 983090983088983088983097 American Recovery and Reinvestment Act (ARRA which expired
on September 983091983088 983090983088983089983089) and the more recent 983090983088983089983089 American Jobs Act stipu-
lated that steel iron and other goods used in the repair and construction of
infrastructure projects in the US (highways bridges mass transit and fed-
eral buildings) must be manufactured in the United States (Matthiesen 983090983088983089983089)
In response to ARRA Canada and the US signed the Canada-US
Procurement Agreement in 983090983088983089983088 which allowed for the purchase of Canadian
goods on seven US infrastructure projects valued at more than $983095983095983095983095983088983088983088
or within the 983091983095 states subject to the WO GPA (Government of Canada
983090983088983089983091a) Te 983090983088983089983089 American Jobs Act did not pass in Senate and is thus moot
While the ARRA dispute was partially resolved lsquoBuy Americanrsquo anda counter position of lsquoBuy Canadianrsquo can flare up on either side of the bor-
der Canadian industry is most vulnerable in this uncertainty Te Canadian
government ought to seek a comprehensive Buy American exemption to
escape future American protectionism In so doing all provincial govern-
ments need to be on board in order to make the WO and NAFA rules
function optimally
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983095
fraserinstituteorg
Canadian Wheat Board (CWB)
In 983090983088983089983089 the Canadian government removed the monopsony held by the
Canadian Wheat Board Tis unilateral action offers a successful reduction
in bilateral trade distortion oday the CWB continues to operate as a mar-
keting group
Intellectual Property Rights (IPR)
From 983089983097983097983093 through 983090983088983089983091 Canada was on the Special 983091983088983089 Priority Watch
List by the United States rade Representative Te US complaint was that
protection and enforcement of IPR in Canada were weak Te Special 983091983088983089
Priority Watch List is designed to identify US trading partners that are the
worst offenders in IPR protection (Embassy of the United States Ottawa
Canada 983090983088983089983091)
Although the issue is not completely resolved Canada has made sig-
nificant progress in recent years Te federal government has strengthened
data protection regulations criminalized the use of camcorders in theaters
and participates in the Anti-Counterfeiting rade Agreement (ACA) nego-
tiations (983090983088983089983091) Most recently Canada enacted the Combatting Counterfeit
Products Act (Embassy of the United States Ottawa Canada 983090983088983089983091) Te
Canadian Government is in the process of strengthening the Copyright Act
and implementing World Intellectual Property Organization Internet reaties
(Embassy of the United States Ottawa Canada 983090983088983089983091)
As a result of these steps Canada was removed from the Special 983091983088983089
Priority Watch List in 983090983088983089983091
Prescription drugs
Prescription drug prices in Canada are relatively low due to a price ceil-
ing mandated by Canadarsquos healthcare system In addition Health Canada
approval times for prescription drugs significantly lag behind their counter-
parts in the United States and the European Union (Barua and Esmail 983090983088983089983091)
US lawmakers have repeatedly expressed their concerns over cheap prescrip-
tion drugs re-entering the US from Canada (Moens and Gabler 983090983088983089983089) TeEU also asked Canada to strengthen IPR protections for prescription drugs
(Lexchin and Gagnon 983090983088983089983091) Since the signing of the CEA agreement in
principle on October 983089983096 983090983088983089983091 the issue between Canada and the EU is now
resolved (Waldie 983090983088983089983091) Canada has agreed to ldquoEU demands for patent pro-
tection for up to two years on brand-name drugsrdquo (Blanchfield 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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983091983096 The state of Canada-US relations in 983090983088983089983092
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
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bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
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bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
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Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
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As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
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debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983089983096 fraserinstituteorg
State of the border andregulatory cooperation
Te decline in Americans traveling to Canada corresponds with the US
Greenback losing value against the Canadian dollar (figures 983089983088 983089983089) However
when we consider the extent of the decline in total numbers it appears dispro-
portionate Te change in American travel suggests instead a bigger problem
following the 983097-983089983089 shock Te imposition of new border transit requirements
such as passports as well as longer wait times and more security screening
has likely dampened US travel across this international boundary Given the
modest economic recovery in the USA from the beginning of 983090983088983089983088 onward
one would expect disposable income including for travel to trend back up
Instead the numbers remain stagnant at around 983090983088 million less than half the
number of 983090983088983088983090
While an overall national average for border wait times is not avail-
able data on major border crossings in both Central Canada and British
Columbia indicate that no reductions in wait times have been achieved
between 983090983088983088983094 and 983090983088983089983089 (figure 983089983090) Te problem of inefficiency as presented
by the Canada-US border goes well beyond wait times It includes inefficient
activity away from the border such as extra warehousing and costs of com-
plying with various facilitated traveler and goods programs such as FAS for
trucks loads and drivers
Tere are consistent cost differences between domestic and cross-bor-
der truck-borne trade which point to significant border costs ldquoFor exports
to the US these costs added 983088983097 percent to the delivered price of goods in
983090983088983088983092 Tis figure fell to 983088983092 percent in 983090983088983088983097 hellip Higher fixed costs per shipment
accounted for most of the additional cost of transporting goods to the USrdquo
(Brown and Anderson 983090983088983089983090) When we consider that in the manufacturingsector parts cross the border several times in various stages of assembly we
realize how this cost accumulates and defeats the efficiency gains otherwise
generated by integrated supply chain manufacturing Border costs are typ-
ically passed on to the consumer as fixed costs per shipment
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The state of Canada-US relations in 983090983088983089983092 983089983097
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An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
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fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983090 The state of Canada-US relations in 983090983088983089983092
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983089983097
fraserinstituteorg
An unprecedented border problem has arisen in the current USAdministrationrsquos lengthy (six years) review of the permitting of a pipeline
border crossing as proposed in the Keystone XL project As a result oil-by-
rail transport has recently increased while the pipeline mode of Canada-US
trade has seen a drop in growth in the 983090983088983089983089983089983090 period ( figures 983089983091 983089983092)
0
10
20
30
40
50
201220112010200920082007200620052004200320022001200019991998
Figure Travellers entering Canada ndash
Source Statistics Canada (2013e)
US residents Non-US residents
0
3
6
9
12
15
18
0
03
06
09
12
15
18
20122011201020092008200720062005200420032002
Trips Spending US$CA$ (Secondary axis)
Figure US overnight travel to Canada ndash
Source Statistics Canada (2011) Bank of Canada (2013b)
M i l l i o n s o f t r i p
s N o m i n a l C A $ b i l l i o n s
U S $ C A $ ex c h a n
g er a t e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
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lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
5
10
15
20
201120102009200820072006
Northbound average delay Southbound average delay
Figure Peace Arch average border wait time ndash
Source Cascade Gateway Data (2013)
M i n u t e s
0
25
50
75
100
125
150
175
200
225
250
275
300
201220112010200920082007200620052004
2 0 0 4
U S $ b
i l l i o n s
Figure All surface modes of freight flow data based on value of goods
ndash
Source Bureau of Transportation Statistics (2013)
Truck Rail Pipeline
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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983091983096 The state of Canada-US relations in 983090983088983089983092
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
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Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
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Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
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Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983089
fraserinstituteorg
lsquoBeyond the Borderrsquo and Regulatory Cooperation
In 983090983088983089983089 Canada and the United States announced an ambitious agreement
to reduce border costs by means of deeper bilateral regulatory and secur-
ity cooperation Te accord seeks to streamline various border proceduresmdash
some already in existence and some newmdashto improve intelligence-sharing
between law enforcement agencies mutual recognition of passenger baggage
screening improved frameworks for trusted trade programs harmoniza-
tion of NEXUS protocols streamlined supply chains enhanced trade com-
petitiveness collaboration in border infrastructure investment and deeper
cooperation in national security investigations Te agreement is known as
Beyond the Border A Shared Vision for Perimeter Security and Economic
Competitiveness (February 983092 983090983088983089983089)
Te Beyond the Border Vision accord also set up a Regulatory
Cooperation Council In it Canadian and American officials seek to reduce
red tape and harmonize regulations in certain key sectors o date the
Council has announced various plans affecting agriculture and food trans-
portation health personal care products workplace chemicals environmentnano materials and small business loans We summarize the key points of
progress made since 983090983088983089983089 in table 983097
-35
-25
-15
-5
5
15
25
35
20122011201020092008200720062005
Truck Rail Pipeline
Figure Growth rate of all surface modes of freight flows () ndash
Source Bureau of Transportation Statistics (2013) calculations by authors
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983090983090 The state of Canada-US relations in 983090983088983089983092
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Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
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The state of Canada-US relations in 983090983088983089983092 983090983091
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On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
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The state of Canada-US relations in 983090983088983089983092 983090983093
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Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4262
The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4462
The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983097 Key elements of Beyond the Border and Regulatory Cooperation
Beyond the Border Program
Integrated Cargo Security Strategy (ICSS)December 2011
Reduces administrative duplication between Canada and the US byaddressing security risks in advance within the shipment supply chainand at the border (Canada Border Services Agency 2013)
Prince Rupert Pilot October 2012 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry via rail is examined by Canadian officials onbehalf of the US (Government of Canada 2013c)
Montreal Pilot January 2013 Offshore cargo heading to the US via marine transport and thenforwarded from port of entry to the US via truck is examined by Canadianofficials on behalf of the US (Government of Canada 2013c)
Pre-load Air Cargo Targeting (PACT) Joint pilot by CBSA and Transport Canada to screen cargo pre-flight onCanada-bound airplanes at foreign airports (Canada Border ServicesAgency 2013)
Tamper Evident Technology PilotOctober 2012
Pilot collaboration between CBSA and US CBP to ensure containersremain sealed upon arrival at the US border (Canada Border Services
Agency 2013)
Truck Cargo Pre-Inspection PilotMarch 2013
Pilot program between the CBSA and the US CBP for pre-inspection ofsouthbound traffic into US (Canada Border Services Agency 2013)
Free and Secure Trade (FAST) PilotSarnia Ontario
Pilot program for usage of FAST lanes without Partners in Protection andCustoms Self Assessment programs (Government of Canada 2013c)
Canada-US Shiprider June 2013 Removal of jurisdictional barriers to improve law enforcement personnelin Windsor-Detroit and Vancouver-Blaine waterways (Government ofCanada 2013c)
EntryExit Initiative Phase II June 2013 Exchange entryexit data between the CBSA and US DHS on individualsat Canada-US land border crossings (Government of Canada 2013c)
Regulatory Cooperation ProgramMemorandum of Understanding between Transport Canada and the RailwayAssociation of Canada September 2013
Framework for Canadian rail emissions between 2011 to 2015(Government of Canada 2013d)
Canada-United States Perimeter Approachto Plant Protection September 2013
Draft framework for increased cooperation and reduction inadministrative duplication between the Canadian Food InspectionAgency (CFIA) and United States Animal and Plant Health InspectionService (APHIS) on trade in plants and plant products (Government ofCanada 2013d)
Common Electronic Submission GatewayPilot (CESG) August 2013
FDA and Health Canada will allow pharmaceutical firms to electronicallysubmit drug applications (Government of Canada 2013d)
Initiative to Align Veterinary DrugApprovals December 2012
Joint reviews between US FDA and Health Canada on veterinary drugproducts (Government of Canada 2013d)
Stricter Air Pollutant Emissions Environment Canada aligns car emissions beginning in 2017 with theUS Environmental Protection Agencyrsquos ldquoTier 3rdquo (Government of Canada2013d)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983091
fraserinstituteorg
On September 983092 983090983088983089983091 $983092983094983094 million in investment was allocated to the
Border Action plan by the Government of Canada in order expand two marine
container examination facilities (Government of Canada 983090983088983089983091c) $983091983091 million
was invested by the Government of Canada in the Asia Pacific Gateway and
rade Corridor Initiative (Government of Canada 983090983088983089983091c) Te Plan includes
an additional 983090983097 harmonization initiatives that will enhance trade activity
between Canada and the US
Neither Beyond the Border nor the Regulatory Cooperation Council
offer further investment or cost estimates on the initiatives described in table
983097 Moens and Gabler (983090983088983089983090) pointed to the need for both the Canadian and
American governments to provide data on border costs so that a cost-benefit
analysis can ensue Nonetheless the small steps of progress towards inte-
grating and harmonizing US and Canadian border practices remains a very
important (long-term) part of reducing the profile of the border
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983092 fraserinstituteorg
Canadian and American public perceptions
Tree observations are noteworthy in recent assessments of public percep-
tions between Americans and Canadians First Americans consistently have
a very high favourability rating of Canadians typically in the 983097983088 plus range
(table 983089983088 figure 983089983093) Both as a friend and a strategic ally Americans hold
Canadians in the most favourable light possible (table 983089983089) Disagreements over
policy between the two countries whether in defence and foreign affairs or
over border and trade issues do not move this fundamental asset Canadians
enjoy in dealing with their neighbour
Second Canadians do not have high expectations of either the
American or Canadian government regarding progress in bilateral relations
As table 983089983090 shows Canadians hold Obama in high regard (983094983091 percent) but
only 983093983092 percent expect progress from him in trade relations Prime Minister
Harper is rated slightly ahead of President Obama in terms of working hard
towards improving Canada-US relations (table 983089983091)
Tird and most significant in light of Canadarsquos Catch-983090983090 situation both
Canadians and Americans are more supportive of closer cooperation and inte-
gration policies than is the case for political representatives in either the United
States or Canada In two recent studies we showed how US Senators and House
Representatives are quite critical of Canada with regard to NAFA issues and bor-
der security (Moens and Gabler 983090983088983089983089) Similarly we found that among the three
major political parties in Canadarsquos parliament only one consistently expressed
itself in favour of closer ties with the United States (Moens and Gabler 983090983088983089983089)
A recent survey of American and Canadian (and Mexican) attitudes
towards free trade and NAFA show surprisingly strong data for more trade
integration In response to the statement ldquoTere should be more free trade
between the US Canada and Mexicordquo 983096983088 percent of Canadians approved
as did 983095983092 percent of Americans Even on border security Canadians andAmericans are more pro-cooperation and integration than their governmental
policies suggest In the US 983092983089 percent support a common perimeter while
983090983088 percent are opposed In Canada 983092983091 percent support it and 983091983088 percent are
opposed (Graves Pastor and Basaacutentildeez 983090983088983089983091) Terefore in terms of public
mandate both governments would have a case to work towards broader bilat-
eral (or trilateral) cooperation to lower trade barriers
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983093
fraserinstituteorg
Table 983089983088 Canadian favourability rating among Americans (February 983090983088983089983090)
Veryfavourable
Mostlyfavourable
Mostlyunfavourable
Veryfavourable Not sure Total
favourableTotal
unfavourable
53 38 3 2 3 91 5
Note n=1015
Source Gallup Poll (2012)
Table 983089983089 Ally or enemy for Americans (June 983090983088983089983091)
Country Ally Friendly Unfriendly Enemy Total Ally andFriendly
Great Britain 66 25 2 1 91
Canada 61 33 2 1 94
China 11 44 26 14 55
Note n=1529Source Gallup Poll (2013)
88
90
92
94
96
98
201220112010200920082007
Figure Canadian favourability among Americans () ndash
Source Gallup Poll (2012)
f a
v o u r a
b l e
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
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US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
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Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983090 What effect will Obama have on Canada-US relations (November 983090983088983089983090)
Canadians Americans
Positive Negative None Positive Negative None
Relationship 62 5 34 48 12 40
Trade 54 10 35 48 12 39
Harmonizing 53 8 40 47 14 39
Note n=1066
Source Abacus Data (2012)
Table 983089983091 Has each leader worked hard to improve Canada-US relations
(July 983090983088983089983090)
Country Agree Disagree Not sure
Stephen Harper 58 32 10
Barack Obama 53 32 15
Note Sample of Canadians
Source HarrisDecima (2012)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983090983095
US policy uncertainty
Canadian economic prospects face their most important challenge in the
United States Te US economic recovery has been modest and real GDP
growth so far has remained below the post-World War II average of post-
recession periods (figure 983089983094) As we noted above the less-than-stellar US
recovery is made even more challenging for Canadian traders in that pro-
ductivity gains in Canada are lagging while the Canadian dollar remains high
On top of that several American-imposed regulatory obstacles to free trade
are depressing trade prospects in crude oil red meat and public works pro-
curement Tese impediments reduce Canadian competitive access to the
US market
A high level of public spending until the January 983090983088983089983091 sequester and
ongoing monetary stimulation have not produced notable US GDP growth
Te seven post-recession periods below show the current average to be well
below the historical average (Young 983090983088983089983091)
983089983097983092983096-983089983097983093983095 983091983096983088
983089983097983093983096-983089983097983094983095 983092983090983096
983089983097983094983096-983089983097983095983095 983091983089983096
983089983097983095983096-983089983097983096983095 983091983089983093
983089983097983096983096-983089983097983097983095 983091983088983093
983089983097983097983096-983090983088983088983095 983090983097983097
983090983088983088983096-983090983088983089983091 983088983095983091
While economic growth has been modest growth in the public debt
has not (figure 983089983095) Publicly held debt in the US is now at 983095983091 percent of GDP
the highest since 983089983097983092983094 (Congressional Budget Office 983090983088983089983091)
Te widening gap between federal government outlays and revenueshas only recently been capped by the Sequester (figure 983089983096) However the
budget Sequester is temporary and final resolution of public spending and
taxation levels remains unclear given repeated gridlock in presidential-con-
gressional policy making High debt levels combined with stalemate over
taxes and budget cuts have produced a case of policy instability or uncer-
tainty in the last five years (Baker Bloom and Davis 983090983088983089983091)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983090983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
US policy uncertainty is further aggravated by inaction on the large
lsquoentitlementrsquo programsmdashSocial Security Medicare and Medicaidmdashwhich are
the major drivers of the long-term gap in revenues and spending
-4
-2
0
2
4
6
8
201220062000199419881982197619701964
Figure US GDP growth rate ndash ( forecast)
Source The World Bank (2013b) OECD (2013)
-10
-8
-6
-4
-2
0
0
20
40
60
80
100
20122011201020092008200720062005200420032002
Government deficit as a percentage of GDP Government debt as a percentage of GDP
Figure US Government deficit and debt as a percentage of GDP ndash
Source Congressional Budget Office (2013)
D e fi c i t p e r c e n t a g e ( ) D
e b t p er c en t a g e ( )
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983089
fraserinstituteorg
Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983090 The state of Canada-US relations in 983090983088983089983092
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4262
The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
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bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983090983097
fraserinstituteorg
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20122003199319831973
Revenue Outlays
Figure US Government revenue and outlays ndash ( US$ billions)
Source Congressional Budget Office (2013)
1 9 8 3 U S $ b i l l i o n s
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4462
The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
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Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983088 fraserinstituteorg
Trade diversification
Given the weakness in near-term US opportunities Canadians are (again)
wondering how to pursue trade diversification away from the United States
Te objective is logical and if achieved will prove advantageous but various
trends in trade and investment show that diversification for Canada is a slow
and arduous journey (table 983089983092)
In terms of overall share exports to China in the last five years have
doubled but the numbersmdashfrom 983090983089983095 percent to 983092983090983094 percentmdashremain rela-
tively low In the same period the US-bound share declined by 983091 percent but
remains a towering 983095983092983093983092 percent Te pattern of small overall impact applies
to all the other top trading partners For example exports to the UK have
increased but exports to Japan and Mexico have essentially stalled When we
consider average export growth rates over the last five years (table 983089983093) we see
a very strong rate for China (983089983093983093 percent) and strong rates for the UK and
South Korea (983096983097 percent and 983094983097 percent) However a 983089983093 percent increase in a
983092 percent overall trade share produces little change Te point we are making
is that at this rate and pattern of trade lsquodiversificationrsquo it will actually take a
very long timemdashwhile relatively small upward trends in trade with the United
States could have a quick and very large impact in the opposite direction
On the import side we notice more trade diversification with the US
share at 983093983088 percent and the Chinese share at 983089983089 percent (table 983089983094) Te Chinese
growth rate on the import side is less than on the export side (table 983089983095) Te
most revealing number may be the high average over five years for Mexico
at 983097 percent Tis could be indicative of a growing supply chain with Mexico
While foreign direct investment (FDI) is not a direct indicator of future
trade trends in investment may harbinger change In terms of outbound
FDI we notice that only a small segment (less than 983089983088 percent) is targeted
for manufacturing (table 983089983096) It is investment in this category in which onewould expect growth in supply chains
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Table 983089983092 Canadarsquos merchandise exports top ten destinations 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 3291 1 777 2361 1 751 2564 1 749
China 92 4 22 97 3 31 114 3 33
UK 114 2 27 105 2 33 141 2 41
Japan 97 3 23 73 4 23 79 4 23
Mexico 51 5 12 42 5 13 43 5 13
Netherlands 32 8 08 24 8 08 28 8 08
South Korea 34 7 08 31 7 10 32 7 09
Germany 39 6 09 33 6 10 34 6 10
France 28 9 07 23 9 07 20 10 06
Brazil 23 10 05 14 10 04 22 9 06
Total 4237 3145 3424
2011 2012Average
shareValue Rank Share Value Rank Share
US 2750 1 737 2783 1 745 752
China 140 3 38 159 2 43 33
UK 157 2 42 154 3 41 37
Japan 89 4 24 85 4 23 23
Mexico 46 5 12 44 5 12 12
Netherlands 40 7 11 37 6 10 09
South Korea 43 6 11 30 7 08 09
Germany 33 8 09 29 8 08 09
France 26 9 07 26 9 07 07
Brazil 24 10 06 21 10 06 06
Total 3732 3734
Source Industry Canada (2013b)
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Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
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The state of Canada-US relations in 983090983088983089983092 983091983091
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Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
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0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
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The state of Canada-US relations in 983090983088983089983092 983091983095
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Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
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0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
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References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983093 Canadian export growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 56 7 -281 9 106 = 5
China 101 6 65 1 187 3
UK 16 9 -73 2 358 2
Japan 202 3 -250 7 106 = 5
Mexico 179 4 -178 6 43 9
Netherlands -85 10 -255 8 183 4
South Korea 276 2 -80 3 52 8
Germany 160 5 -167 4 54 7
France 36 8 -174 5 -122 10
Brazil 706 1 -380 10 603 1
2011 2012Average
Rank Rank
US 104 8 27 2 02
China 270 4 152 1 155
UK 148 6 -02 4 90
Japan 161 5 -29 6 38
Mexico 94 9 -16 5 24
Netherlands 475 1 -55 7 53
South Korea 374 2 -272 10 70
Germany 05 10 -95 9 -09
France 311 3 23 3 15
Brazil 109 7 -92 8 189
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
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Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4262
The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4562
983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983091
fraserinstituteorg
Table 983089983094 Canadarsquos merchandise imports top ten sources 983090983088983088983096ndash983090983088983089983090 (983090983088983088983090 CA$ billions)
2008 2009 2010
Value Rank Share Value Rank Share Value Rank Share
US 1992 1 524 1633 1 511 1745 1 504
China 374 2 98 347 2 109 382 2 110
Mexico 157 3 41 145 3 45 190 3 55
Japan 134 4 35 108 4 34 115 4 33
Germany 111 5 29 95 5 30 97 5 28
UK 110 6 29 82 6 26 92 6 27
South Korea 53 9 14 52 7 16 53 7 15
Algeria 67 7 18 33 10 10 31 10 09
Italy 45 10 12 39 9 12 40 9 12
France 53 8 14 49 8 15 47 8 13
Total 3804 3194 3465
2011 2012Average
shareValue Rank Share Value Rank Share
US 1846 1 496 1922 1 506 508
China 402 2 108 417 2 110 107
Mexico 205 3 55 210 3 55 50
Japan 109 4 29 123 4 33 33
Germany 107 5 29 118 5 31 29
UK 86 6 23 70 6 18 25
South Korea 55 7 15 52 7 14 15
Algeria 46 9 12 49 8 13 12
Italy 43 10 11 43 9 11 12
France 46 8 12 41 10 11 13
Total 3723 3796
Source Industry Canada (2013b)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Table 983089983095 Old and new trade prospectsmdashimport growth rates 983090983088983088983096ndash983090983088983089983090
2008 2009 2010
Rank Rank Rank
US 29 8 -178 7 89 5
China 112 4 -70 2 123 3
Mexico 43 7 -77 4 337 1
Japan -11 10 -192 8 89 4
Germany 105 5 -149 6 44 7
UK 95 6 -252 9 141 2
South Korea 120 3 -14 1 36 8
Algeria 518 1 -511 10 -50 10
Italy 11 9 -132 5 48 6
France 191 2 -70 3 -35 9
2011 2012Average
Rank Rank
US 88 5 57 4 17
China 82 6 53 5 60
Mexico 111 3 39 6 91
Japan -29 9 151 1 01
Germany 132 2 117 2 50
UK -36 10 -173 10 -45
South Korea 76 7 -37 8 37
Algeria 533 1 91 3 116
Italy 95 4 23 7 09
France 22 8 -97 9 02
Source Industry Canada (2013b) calculations by authors
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
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Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
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Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
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Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
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8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
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internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
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Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
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International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
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Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983093
fraserinstituteorg
In terms of overall Canadian outbound FDI stocks in the US remain
very high despite the recent US recession while growth in stock in Asia is
modest (figure 983089983097) When we examine Canadian FDI in the so-called BRIC
states we notice that investment in both China and India is relatively small
Canadian mining investment in Brazil is much larger (figure 983090983088) In fact when
we examine amounts of FDI we find that Canada is not really a big BRIC
investor other than Brazil Chile Hong Kong and Peru are larger FDI recipi-
ents than China and India (figure 983090983089)
In terms of FDI flowing into Canada we notice the very large share
(983090983096983094983093 percent) in manufacturing which indicates both the predominant
share of US FDI and the extensive integrated supply chains in Canada-US
manufacturing (table 983089983097) Even more than for outbound FDI inflow stocks
show very large US preponderance (figure 983090983090) Such continued concentra-
tion of US FDI in Canada suggests that Canadian trade diversification is not
just a decision to be made by Canadian producers
Like trade growth Chinese FDI growth in Canada is positive but the
overall numbers are small and do not show rapid growth in the last 983091 years
(figure 983090983091)
Table 983089983096 Top industries for outward stocks of FDI 983090983088983089983090
Category Value Share
Mining oil and gas extraction 1099 188
Oil and gas subcategory 542 93
Manufacturing 569 97
Finance and insurance 2334 399
Management of companies and enterprises 757 129
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983092983089
References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
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Art Grunder
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Raymond Heung
Bill Korol
Bill Mackness
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Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
1
2
3
4
5
6
7
8
9
10
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n s
Figure Canadian foreign direct investment (stock) BRIC ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Brazil PRC India Russia
0
20
4060
80
100
120
140
160
180
200
220
240
260
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) various regions
ndash
Notes Excluding Mexico Canadian FDI to Mexico in 2012 was $557 billion
Foreign Direct Investment measures the purchase of various forms of capital stock abroad
However tax havens (Barbados Bermuda etc) are frequently found to be some of the highest
recipients of FDI In reality tax havens do not reflect economic growth as FDI figures invested
into tax havens are often reinvested back to the source country in a concept known as
round-tripping (Financial Post 2013) We have accounted for tax havens by removing them from
tables and figures in this section The numbers corresponding to Figure 19 would be Barbados
($593 billion) Bermuda ($118 billion) British Virgin Islands ($21 billion) Cayman Islands ($302
billion)
Source Foreign Affairs Trade and Development Canada (2013c)
US Europe Asia amp Oceania Central amp South America Africa
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
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Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
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Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
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Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983091983095
fraserinstituteorg
Table 983089983097 Top industries for inward stocks of FDI 983090983088983089983090
Category Value Share
Oil and gas extraction 766 147
Manufacturing 1492 287
Petroleum and coal products manufacturing 377 72
Wholesale trade 395 76
Finance and insurance 699 134
Management of companies and enterprises 999 192
Note Value in 2002 CA$ billions Categories in North American Industry Classification System
Source Foreign Affairs Trade and Development Canada (2013c)
0
2
4
6
8
10
12
2012201120102009200820072006
2 0 0 2 C A $ b i l l i o n
s
Figure Canadian foreign direct investment (stock) Chile Hong Kong
Peru amp Korea ndash
Source Foreign Affairs Trade and Development Canada (2013c)
Chile Hong Kong Peru Korea
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983091983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
0
40
80
120
160
200
240
280
20122011201020092008200720062005
2 0 0 2 C A $ b i l l i o n
s
Figure Foreign direct investment (stock) in Canada from top three
countries ndash
Source Foreign Affairs Trade and Development Canada (2013c)
US Netherlands UK
0
2
4
6
8
10
12
201220112010200920082007
2 0 0 2 C A $ b
i l l i o n s
Figure Foreign direct investment (stock) in Canada from China
ndash
Source Foreign Affairs Trade and Development Canada (2013c)
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4762
983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
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Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
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Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
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Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
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MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4662
fraserinstituteorg 983091983097
Conclusion the bilateral anddiversification agenda
China was Canadarsquos second largest trading partner in 983090983088983089983090 with net merchan-
dise totaling $983095983088 billion but this was far behind US net merchandise trade at
$983093983095983090983093983097 billion (Industry Canada 983090983088983089983091b) Both trade and investment patterns
suggest that change will be slow Canadarsquos foreign investment review process
has signaled its concern with Chinarsquos State-Owned Enterprisesrsquo predominant
involvement in energy projects Until China proceeds with more privatization
of this sector or Canadarsquos changes its criteria Chinese FDI levels in Canada
will remain small Te flattening of FDI flows in the 983090983088983089983088ndash983090983088983089983090 period show
this pattern (figure 983090983091)
European economies remain among Canadarsquos top export destinations
and import sources with at least four European countries consistently rank-
ing in the top ten Te successful completion of the Comprehensive Economic
rade Agreement (CEA) with the European Union in 983090983088983089983091 bodes well for
stronger trade growth with these countries A joint report between Canada
and the European Union issued in 983090983088983088983097 predicts the gains from trade over
seven years to be 991404983096983090 billion and 991404983089983089983094 billion respectively (Foreign Affairs
rade and Development Canada 983090983088983089983090b) rade liberalization in services and
the elimination of tariffs on goods contribute the most to these GDP gains
Most recent estimates predict that Canadian exports to the EU will increase
by 983090983088983094 percent and that EU exports to Canada will increase by 983090983092983091 percent
(Foreign Affairs rade and Development Canada 983090983088983089983090b)
Te boost CEA offers in terms of Canadarsquos trade diversification is not
so much in volume as it is in perception confidence and possibly in terms
of strategic trade position in North America As both Mexico and Canada
now have EU trade agreements they may be in a better position to leveragethis advantage within NAFA as the US is pursuing a ransatlantic rade
and Investment Partnership (IP) with the EU Another boost offered by
CEA is that the agreement calls for lowering regulatory barriers in several
sectors It is both inside NAFA in IP and in a potential rans Pacific
Partnership trade agreement that such mutual recognition on regulations or
common standards can boost trade
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
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Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
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the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
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8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
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no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
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Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
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fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983092983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Ultimately Canadarsquos objectives intersect at the point where frustration
with the US meets the limits of diversification Te most optimal short-term
outcome for Canada remains a vibrant US economy coupled with lower trade
barriers in North America Helping to create a strategic focus at the highest
levels in Washington for lowering regulatory barriers inside North America
must remain a priority for Canadian officials as progress on this file benefits
Canadian consumers and producers most
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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fraserinstituteorg 983092983089
References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4862
fraserinstituteorg 983092983089
References
Abacus Data (983090983088983089983090 November 983090983088) Beyond the Canadian-American Border
lthttpabacusdatacawp-contentuploads983090983088983089983090983089983089Can-AM_Report_CABC_
Nov983090983088983089983090_FINALpdfgt
Angus Reid (983090983088983089983090 May 983089983095) Americans and Canadians Feel Tey Have Lost
Out with NAFA Press Releaselthttpvcuvisioncriticalcomwp-contentuploads983090983088983089983090983088983093Americans-and-
Canadians-Feel-They-Have-Lost-Out-with-NAFTApdfgt
Baker J S and M Byers (983090983088983089983090) Crossed Lines Te Curious Case of
the Beaufort Sea Maritime Boundary Dispute Ocean Development amp
International Law 983092983091 983089 983095983088ndash983097983093
Baker S R N Bloom and S J Davis (983090983088983089983091) Measuring Economic Policy
Uncertainty Center for Economic Performance
Bank of Canada (983090983088983089983091a) Consumer Price Index 983090983088983088983088 to Present
lthttpwwwbankofcanadacaratesprice-indexescpigt
Bank of Canada (983090983088983089983091b) Monthly and annual average exchange rates
lthttpwwwbankofcanadacaratesexchangeexchange-rates-in-pdfgt
Bank of Canada (983090983088983089983091c) Monthly Average Exchange Rates 983089983088-Year Lookup
lthttpwwwbankofcanadacaratesexchangemonthly-average-lookupgt
Barua B and N Esmail (983090983088983089983091) Te Case for Mutual Recognition of Drug
Approvals Studies in Health Policy Fraser Institute
Blanchfield M (983090983088983089983091 November 983089983094) Prescription drug costs to rise due to
EU deal Te Vancouver Sun lthttpwwwvancouversuncombusinessPrescrip
tion+drug+costs+rise+deal983097983089983095983092983090983096983090storyhtmlgt
Websites retrievable as of January 10486251048626 104862698308810486251048627
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 4962
983092983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Brown M W and W P Anderson (983090983088983089983090 November 983089983097) rucking Across
the Border Te Relative Cost of Cross-border and Domestic rucking 983090983088983088983092
to 983090983088983088983097 Statistics Canadalthttpwww983093statcangccabsolcolc-celolc-celcat
no=983089983089F983088983088983090983095MWE983090983088983089983090983088983096983089amplang=enggt
Bureau of ransportation Statistics (983090983088983089983091) North American ransborder
Freight Data Indexed Data lthttptransborderbtsgovprograms
internationaltransborderindexIndex_Interfacehtmlgt
Canada Border Services Agency (983090983088983089983091 September 983092) Integrated Cargo
Security Strategy (ICSS) Overview
lthttpwwwcbsa-asfcgccatrade-commerceicss-sisficss-sisf-menu-enghtmlgt
Te Canadian Press (983090983088983089983090 July 983089983096) Canada Claims Victory in Softwood
Dispute lthttpmetronewscanewscanada983091983088983090983089983092983091canada-claims-victory-in-
softwood-disputegt
Te Canadian Press (983090983088983089983091a June 983095) Canada Treatens to Impose ariffs on
US Foods Furniture in Meat-Labelling Dispute
lthttpbusinessfinancialpostcom983090983088983089983091983088983094983088983095canada-threatens-to-impose-tariffs-
on-u-s-foods-furniture-in-meat-labelling-disputegt
Te Canadian Press (983090983088983089983091b July 983089983095) Canada-EU rade Deal May Come in
983090983088983089983092 But Will be Worth the Wait Says Envoy
lthttpwwwmontrealgazettecombusinessCanadaEU+trade+deal+come+983090983088983089983092+
will+worth+wait+says+envoy983096983094983095983090983095983095983089storyhtmlgt
Te Canadian Press (983090983088983089983091c July 983091) EU Envoy Prods Canada to Finalize
Free rade Deal lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983095983088983091pol-cp-
canada-eu-trade-talks-pushhtmlgt
Te Canadian Press (983090983088983089983091d February 983090983095) US Program Cuts Treaten
Border Pact with Canada lthttpwwwcbccanewspoliticsstory983090983088983089983091983088983090983090983095
canada-us-beyond-the-border-pact-federal-programshtmlgt
Cascade Gateway Data (983090983088983089983091) Border Data Warehouse
lthttpwwwcascadegatewaydatacomCustomQuerygt
CBC News (983090983088983088983096 October 983091983089) Wheat Board Wins ariff Dispute with US
lthttpwwwcbccanewscanadamanitobastory983090983088983088983096983089983088983091983089wheat-tariffshtmlgt
CBC News (983090983088983089983090 January 983090983091) Softwood Lumber Agreement with US
Extended lthttpwwwcbccanewspoliticsstory983090983088983089983090983088983089983090983091pol-canada-us-
trade-softwood-lumberhtmlgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
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8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
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8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
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In order to protect its independence the Institute does not accept grants from
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Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
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le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
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expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5062
The state of Canada-US relations in 983090983088983089983092 983092983091
fraserinstituteorg
Congressional Budget Office (983090983088983089983091 August 983089983090) Historical Budget Datamdash
August 983090983088983089983091 lthttpwwwcbogovpublication983092983092983093983088983095gt
Consumer Energy Alliance (983090983088983089983091 June 983090983088) Keystone XL By Te Numbers
lthttpwwwtheenergyvoicecom983096983095983092gt
Embassy of the United States Ottawa Canada (983090983088983089983091) Special 983091983088983089 Report
(Intellectual Property Rights) lthttpcanadausembassygovkey-reports
special-983091983088983089-report-intellectual-property-rightshtmlgt
Financial Post (983090983088983089983091 June 983090983094) ax Havens Triving as Efforts to Stop Flow
of Money Offshore Fail UN lthttpbusinessfinancialpostcom983090983088983089983091983088983094983090983094tax-
havens-thriving-as-efforts-to-stop-flow-of-money-offshore-fail-ungt
Food Marketing Institute (983090983088983089983091 May 983090983091) FMI Statement on US
Department of Agriculturersquos New Rule Regarding Mandatory Country of
Origin Labeling Requirements for Meat lthttpwwwfmiorgnews-roomnews-archiveview983090983088983089983091983088983093983090983091fmi-statement-
on-us-department-of-agriculture-s-new-rule-regarding-mandatory-country-of-
origin-labeling-requirements-for-meatgt
Foreign Affairs rade and Development Canada (983090983088983089983090a July 983089983097) Canada
Applauds Softwood Lumber Ruling on British Columbiarsquos imber-Pricing
System News Release lthttpwwwinternationalgccamedia_commerce
commnews-communiques983090983088983089983090983088983095983089983096aaspxgt
Foreign Affairs rade and Development Canada (983090983088983089983090b April 983089983091)
Canada-European Union Joint Report owards a Comprehensive Economic
Agreement lthttpwwwinternationalgccatrade-agreements-accords-
commerciauxagr-acceu-uecan-eu-report-can-ue-rapportaspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091a June 983094) Canadarsquos
International rade in Services lthttpwwwinternationalgccaeconomist-
economisteassetspdfsDatafacts-fichesPfact_ENG_Servicespdfgt
Foreign Affairs rade and Development Canada (983090983088983089983091b April 983089983093) Dispute
Settlement Cases Related to NAFA Chapter 983089983097
lthttpwwwinternationalgccatrade-agreements-accords-commerciauxtopics-domainesdisp-diffwheataspxlang=enggt
Foreign Affairs rade and Development Canada (983090983088983089983091c July 983089983095) Foreign
Direct Investment Statistics lthttpwwwinternationalgccaeconomist-
economistestatistics-statistiquesinvestments-investissementsaspxgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
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MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
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CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5162
983092983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Gallup Poll (983090983088983089983090 February 983089983094) Americans Give Record-High Ratings to
Several US Allies lthttpwwwgallupcompoll983089983093983090983095983091983093americans-give-record-
high-ratings-several-alliesaspxgt
Gallup Poll (983090983088983089983091 June 983094) In US More See China as Friend Tan Foe
lthttpwwwgallupcompoll983089983094983090983097983091983093us-more-see-china-friend-foeaspxgt
Government of Canada (983090983088983089983091a July 983089983094) Canada-US Agreement on
Government Procurement lthttpwwwcanadainternationalgccasell983090usgov-
vendreaugouvusaprocurement-marchesagreement-accordaspxlang=enggt
Government of Canada (983090983088983089983091b) Canadarsquos Economic Action Plan
lthttpwwwactionplangccagt
Government of Canada (983090983088983089983091c) Beyond the Border Action Plan News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsbtb_news_october_983090983088983089983091pdfgt
Government of Canada (983090983088983089983091d) Regulatory Cooperation Council News
October 983090983088983089983091
lthttpactionplangccasitesdefaultfilespdfsrcc_news_october_983090983088983089983091pdfgt
Graves F R Pastor and M Basaacutentildeez (983090983088983089983091) Te NAFA Promise and the
North American Reality Te Gap and How to Narrow It Center for North
American Studies
Green K P and D Furchtgott-Roth (983090983088983089983091) Intermodal Safety in the
ransport of Oil Studies in Energy ransportation Fraser InstitutelthttpswwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsintermodal-safety-in-the-transport-of-oilpdfgt
Harris Decima (983090983088983089983090 July) Obama Remains Extremely Popular in Canada
lthttpwwwharrisdecimacomnewsreleases983090983088983089983090983088983095983089983092983092983094-obama-remains-
extremely-popular-canadagt
Holden M (983090983088983089983088 July 983090983090) Canadian rade and Investment Activity
CanadandashAlgeria Library of Parliament
lthttpwwwparlgccaContentLOPResearchPublications983090983088983089983088-983092983093-epdfgt
Hussain Y (983090983088983089983091 August 983090983097) Investments in Western Canada Oil Rail
erminals op USD983089B Report Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983096983090983097investments-in-western-canada-oil-
rail-terminals-top-usd983089b-report__lsa=983091dab-983088983093eagt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
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983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5262
The state of Canada-US relations in 983090983088983089983092 983092983093
fraserinstituteorg
Industry Canada (983090983088983089983091a January 983090983091) Capital Investment Oil and Gas
Extraction (NAICS 983090983089983089)
lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983089983089invehtmlgt
Industry Canada (983090983088983089983091b February 983095) International rade Utilities (NAICS
983090983090) lthttpwwwicgccacis-siccis-sicnsfIDEcis-sic983090983090intehtmlgt
Kappler M H Reisen M Schularick and E urkisch (983090983088983089983089) Te
Macroeconomic Effects of Large Exchange Rate Appreciations Organisation
for Economic Co-operation and Development
lthttpwwwoecd-ilibraryorgfrdevelopmentthe-macroeconomic-effects-of-
large-exchange-rate-appreciations_983093kgglsnbscbs-engt
Komarow S and E Martin (983090983088983089983091 March 983090983090) Mexico Envisions Nafta-EU
rade Agreement Foreign Minister Says Bloomberg News
lthttpwwwbloombergcomnews983090983088983089983091-983088983091-983090983091mexico-envisions-nafta-eu-trade-
agreement-foreign-minister-sayshtmlgt
Lexchin J and M-A Gagnon (983090983088983089983091) CEA and Intellectual Property
Te Debate over Pharmaceutical Patents Canada-Europe ransatlantic
Dialogue 983095
Lewis J (983090983088983089983091b September 983097) Keystone XL lsquoNo Longer a Necessityrsquo For
Canadian Producers Analyst Financial Post
lthttpbusinessfinancialpostcom983090983088983089983091983088983097983088983097keystone-xl-no-longer-a-necessity-
for-canadian-producers-analyst__lsa=983091dab-983088983093eagt
Matthiesen B (983090983088983089983089 November 983097) Recent Buy American Provisions What you need to know Canadian Manufacturers and Exporters
lthttpwwwcme-meccalid=JCKNC-E983095983092983090G-
983089W983094JAampcomaction=showampcid=983094C983093CK-983090G983093983093Y-WIB983096Rgt
Millington D and C A Murillo (983090983088983089983091) Canadian Oil Sands Supply
Costs and Development Projects (983090983088983089983090-983090983088983092983094) Canadian Energy Research
Institute lthttpwwwcericaimagesstories983090983088983089983091-983088983094-983089983088_CERI_Study_983089983091983091_-_Oil_
Sands_Update_983090983088983089983090-983090983088983092983094pdfgt
Moens A (983090983088983089983088) Skating on Tin Ice Canadian-American Relations in983090983088983089983088 and 983090983088983089983089 Studies in Canada-US Relations Fraser Institute
Moens A and J Clemens (eds) (983090983088983089983091) Te US Election 983090983088983089983090 Implications
for Canada Fraser Institute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5362
983092983094 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Moens A and N Gabler (983090983088983089983089) What Congress Tinks of Canada Studies
in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationswhatcongressthinksofcanadapdfgt
Moens A and N Gabler (983090983088983089983090) Measuring the Costs of the Canada-US
Border Studies in Canada-US Relations Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researchpublicationsmeasuring-the-costs-of-the-canada-us-borderpdfgt
Moens A and A V Leon (983090983088983089983090) Mandatory Country of Origin Labeling
Te Case For a Harmonized Canada-US Beef and Pork Regulatory Regime
Fraser Forum (JulyAugust) Fraser Institute
lthttpwwwfraserinstituteorguploadedFilesfraser-caContentresearch-news
researcharticlesmandatory-country-of-origin-labeling-ff983088983095983089983090pdfgt
Murse (983090983088983089983091) Hillary Clinton on the Keystone XL Pipeline lthttpuspoliticsaboutcomodCampaignsElectionsaHillary-Clinton-On-The-
Keystone-Xl-Pipelinehtmgt
Te New York imes (983090983088983089983091 July 983090983096) Interview With President Obama
lthttpwwwnytimescom983090983088983089983091983088983095983090983096uspoliticsinterview-with-president-obama
htmlref=politicsgt
Office of the United States rade Representative (983090983088983089983091 May 983089) USR
Releases Annual Special 983091983088983089 Report on Intellectual Property Rights
lthttpwwwustrgovabout-uspress-officepress-releases983090983088983089983091mayustr-releases-
annual-special-983091983088983089-reportgt
Organisation for Economic Co-operation and Development [OECD]
(983090983088983089983091) Economics Key ables from OECD
lthttpwwwoecd-ilibraryorgeconomicseconomics-key-tables-from-oecd_983090983088983095983092983091
983096983092xjsessionid=983095b983089983088tnihdk983088983089qx-oecd-live-983088983089gt
Pew Global (983090983088983089983091) Opinion of the United States
lthttpwwwpewglobalorgdatabaseindicator983089country983091983097gt
Robertson C (983090983088983089983091 April 983091) North Korearsquos Treats Show that CanadaNeeds to be Part of US Missile Defence Pact Te Globe and Mail
lthttpwwwtheglobeandmailcomcommentarynorth-koreas-threats-show-that-
canada-needs-to-be-part-of-us-missile-defence-pactarticle983089983088983095983089983091983094983089983090gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5462
The state of Canada-US relations in 983090983088983089983092 983092983095
fraserinstituteorg
Statistics Canada (983090983088983089983089 February 983090983093) ravellers to Canada by Country of
Origin op 983089983093 Countries of Origin
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983096a-enghtmgt
Statistics Canada (983090983088983089983091a November 983095) Canadian International
Merchandise rade Database lthttpwww983093statcangccacimt-cicmsection-se
ctionlang=engampdataTransformation=983088amprefYr=983090983088983089983090amprefMonth=983096ampfreq=983089983090ampcountry
Id=983088ampusaState=983097ampprovId=983089ampretrieve=Retrieveampsave=nullamptrade=nullgt
Statistics Canada (983090983088983089983091b April 983093) Canadian International Merchandise
rade February 983090983088983089983091 Te Daily
lthttpwwwstatcangccadaily-quotidien983089983091983088983092983088983093dq983089983091983088983092983088983093b-enghtmgt
Statistics Canada (983090983088983089983091c) Merchandise Imports and Exports Customs and
Balance of Payments Basis CANSIM able 983090983090983096-983088983088983093983096
lthttpwww983093statcangccacansima983090983094lang=engampretrLang=engampid=983090983090983096983088983088983093983096ampta
bMode=dataTableampsrchLan=-983089ampp983089=-983089ampp983090=983097gt
Statistics Canada (983090983088983089983091d August 983094) Imports Exports and rade Balance
of Goods on a Balance-of-Payments Basis by Country or Country Grouping
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089gblec983088983090a-enghtmgt
Statistics Canada (983090983088983089983091e July 983089983096) Non-Resident ravellers Entering
Canada
lthttpwwwstatcangccatables-tableauxsum-soml983088983089cst983088983089arts983091983092-enghtmgt
Statistics Canada (983090983088983089983091f February 983090983095) Private and Public Investment 983090983088983089983091
Te Dailylthttpwwwstatcangccadaily-quotidien983089983091983088983090983090983095dq983089983091983088983090983090983095a-enghtmgt
Statistics Canada (983090983088983089983091g June 983095) Business Sector Labour Productivity and
Related Variables for Canada and the United States
lthttpwwwstatcangccadaily-quotidien983089983091983088983094983088983095t983089983091983088983094983088983095b983088983088983089-enghtmgt
D Economics (983090983088983089983090 February 983090983092) Strong Canadian Dollar Ahead But
Mind the Potholes
lthttpwwwtdcomdocumentPDFeconomicsspeciallp983088983090983089983090_can_dollarpdfgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091a October 983091983088)
Consumer Price Index ltftpftpblsgovpubspecialrequestscpicpiaitxtgt
US Department of Labor Bureau of Labor Statistics (983090983088983089983091b November 983090)
Labor Force Statistics from the Current Population Survey
lthttpdatablsgovtimeseriesLNS983089983092983088983088983088983088983088983088gt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5562
983092983096 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Waldie P (983090983088983089983091 October 983089983096) Canada EU Unveil lsquoHistoricrsquo Free-trade
Agreement Te Globe and Mail
lthttpwwwtheglobeandmailcomnewspoliticseu-harperarticle983089983092983097983090983092983097983089983093gt
Te World Bank (983090983088983089983091a) Merchandise trade ( of GDP)
lthttpdataworldbankorgindicatorTGVALTOTLGDZSgt
Te World Bank (983090983088983089983091b) United States
lthttpdataworldbankorgcountryunited-statesgt
Young J (983090983088983089983091 April 983089983090) Te Worst Four Years Of GDP Growth In
History Yes We Should Be Worried Forbes
lthttpwwwforbescomsitesrealspin983090983088983089983091983088983092983089983090the-worst-four-years-of-gdp-
growth-in-history-yes-we-should-be-worriedgt
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5662
The state of Canada-US relations in 983090983088983089983092 983092983097
fraserinstituteorg
About the authors
Alexander MoensAlexander Moens (wwwalexandermoenscom) is a professor of Political
Science at Simon Fraser University in Vancouver Canada and a Senior Fellow
in American Policy at the Fraser Institute Moens is the author of Te Foreign
Policy of George W Bush Values Strategy Loyalty (983090983088983088983092) and Foreign Policy
Under Carter (983089983097983097983088) as well as editor or co-editor of Disconcerted Europe Te
Search for a New Security Architecture (983089983097983097983092) NAO and European Security
Alliance Politics from the Cold Warrsquos End to the Age of errorism (983090983088983088983091) and
Immigration Policy and the errorist Treat in Canada and the United States
(983090983088983088983096) Moens has published in numerous journals and newspapers His
most recent publications include ldquoObamarsquos Foreign Policy Change Without
Convictionrdquo in Nikolaos zifakis (ed) International Politics in imes of
Change (Berlin and Heidelberg 983090983088983089983090) ldquoNAO and the EU Canadarsquos Security
Interests in Europe and Beyondrdquo in David S McDonough (ed) Canadarsquos
National Security in the Post-983097983089983089 World (oronto University Press 983090983088983089983090)
ldquoCanadian Interests in Building Cooperation Between NAO and the African
Unionrdquo with Jimmy Peterson in Brooke Smith-Windsor (ed) AUndashNAO
Collaboration Implications and Prospects (NAO Defence College 983090983088983089983091)
and ldquoGeorge W Bush Decision Maker ake wordquo Chapter 983094 in Donald R
Kelley and odd G Shields (eds) aking the Measure Te Presidency of
George W Bush (exas AampM University Press 983090983088983089983091)
Alex BartosAlex Bartos holds a BSS degree in Economics from the University of Ottawa
and a BA in Political Science from Simon Fraser University He has worked
for both federal and provincial elected representatives founded and was
president of the SFU Conservative Club and acted in an executive capacity
for the BC Conservative Youth Association His specific research interests
include Canada-US trade policy and international trade relations Mr Bartos
is the recipient of several honours for both his academic and extracurricular
volunteer activities
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5762
983093983088 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Acknowledgments
Te authors are indebted to the anonymous reviewers for their comments
suggestions and insights Any remaining errors or oversights are the sole
responsibility of the authors As the researchers worked independently the
views and conclusions expressed in this paper do not necessarily reflect those
of the Board of rustees of the Fraser Institute the staff or supporters
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5862
The state of Canada-US relations in 983090983088983089983092 983093983089
fraserinstituteorg
Publishing information
DistributionTese publications are available from lthttpwwwfraserinstituteorggt in
Portable Document Format (PDF) and can be read with Adobe Acrobatreg or
Adobe Readerreg versions 983095 or later Adobe Readerreg XI the most recent ver-
sion is available free of charge from Adobe Systems Inc at lthttpgetadobe
comreadergt Readers having trouble viewing or printing our PDF files us-
ing applications from other manufacturers (eg Applersquos Preview) should use
Readerreg or Acrobatreg
Ordering publicationso order printed publications from the Fraser Institute please contact the
publications coordinator
bull e-mail salesfraserinstituteorg bull telephone 983094983088983092983094983096983096983088983090983090983089 ext 983093983096983088 or toll free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983088
bull fax 983094983088983092983094983096983096983096983093983091983097
MediaFor media enquiries please contact our Communications Department
bull 983094983088983092983095983089983092983092983093983096983090
bull e-mail communicationsfraserinstituteorg
CopyrightCopyright copy 983090983088983089983092 by the Fraser Institute All rights reserved No part of this
publication may be reproduced in any manner whatsoever without writtenpermission except in the case of brief passages quoted in critical articles and
reviews
Date of issueJanuary 983090983088983089983092
ISBN983097983095983096-983088-983096983096983097983095983093-983090983096983092-983097
CitationMoens Alexander and Alex Bartos (983090983088983089983092) Canada`s Catch-983090983090 Te State of
Canada-US Relations in 983090983088983089983092 Fraser Institute lthttpwwwfraserinstituteorggt
Cover designBill Ray
Cover imagesUS and Canada Flag Portions copy aliced Bigstock
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 5962
983093983090 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
Supporting the Fraser Institute
o learn how to support the Fraser Institute please contact
bull Development Department Fraser Institute
Fourth Floor 983089983095983095983088 Burrard Street
Vancouver British Columbia V983094J 983091G983095 Canada
bull telephone toll-free 983089983096983088983088983094983094983093983091983093983093983096 ext 983093983096983094
bull e-mail developmentfraserinstituteorg
Lifetime patronsFor their long-standing and valuable support contributing to the success of
the Fraser Institute the following people have been recognized and inducted
as Lifetime Patrons of the Fraser Institute
Sonja Bata
Charles Barlow
Ev Berg
Art Grunder
Jim Chaplin
Serge Darkazanli
John Dobson
Raymond Heung
Bill Korol
Bill Mackness
Fred Mannix
Jack Pirie
Con Riley
Catherine Windels
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6062
The state of Canada-US relations in 983090983088983089983092 983093983091
fraserinstituteorg
Purpose funding amp independence
Te Fraser Institute provides a useful public service We report objective
information about the economic and social effects of current public policies
and we offer evidence-based research and education about policy options
that can improve the quality of life
Te Institute is a non-profit organization Our activities are funded
by charitable donations unrestricted grants ticket sales and sponsorships
from events the licensing of products for public distribution and the sale
of publications
All research is subject to rigorous review by external experts and is
conducted and published separately from the Institutersquos Board of rustees
and its donors
Te opinions expressed by the authors are those of the individuals
themselves and do not necessarily reflect those of the Institute its Board of
rustees its donors and supporters or its staff Tis publication in no way
implies that the Fraser Institute its trustees or staff are in favour of or op-
pose the passage of any bill or that they support or oppose any particular
political party or candidate
As a healthy part of public discussion among fellow citizens who de-
sire to improve the lives of people through better public policy the Institute
welcomes evidence-focused scrutiny of the research we publish including
verification of data sources replication of analytical methods and intelligent
debate about the practical effects of policy recommendations
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6162
983093983092 The state of Canada-US relations in 983090983088983089983092
fraserinstituteorg
About the Fraser Institute
Our vision is a free and prosperous world where individuals benefit from
greater choice competitive markets and personal responsibility Our mission
is to measure study and communicate the impact of competitive markets
and government interventions on the welfare of individuals
Founded in 983089983097983095983092 we are an independent Canadian research and edu-
cational organization with locations throughout North America and interna-
tional partners in over 983096983093 countries Our work is financed by tax-deductible
contributions from thousands of individuals organizations and foundations
In order to protect its independence the Institute does not accept grants from
government or contracts for research
Nous envisageons un monde libre et prospegravere ougrave chaque personne beacuteneacutefi-
cie drsquoun plus grand choix de marcheacutes concurrentiels et de responsabiliteacutes
individuelles Notre mission consiste agrave mesurer agrave eacutetudier et agrave communiquer
lrsquoeffet des marcheacutes concurrentiels et des interventions gouvernementales sur
le bien-ecirctre des individus
Peer reviewmdashvalidating the accuracy of our researchTe Fraser Institute maintains a rigorous peer review process for its research
New research major research projects and substantively modified research
conducted by the Fraser Institute are reviewed by experts with a recognized
expertise in the topic area being addressed Whenever possible external
review is a blind process Updates to previously reviewed research or new
editions of previously reviewed research are not reviewed unless the update
includes substantive or material changes in the methodology
Te review process is overseen by the directors of the Institutersquos re-
search departments who are responsible for ensuring all research published
by the Institute passes through the appropriate peer review If a dispute about
the recommendations of the reviewers should arise during the Institutersquos
peer review process the Institute has an Editorial Advisory Board a panel
of scholars from Canada the United States and Europe to whom it can turn
for help in resolving the dispute
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
8132019 Canadas Catch 22 State of Canada Us Relations in 2014
httpslidepdfcomreaderfullcanadas-catch-22-state-of-canada-us-relations-in-2014 6262
The state of Canada-US relations in 983090983088983089983092 983093983093
Members
Past members
Editorial Advisory Board
Prof erry L Anderson
Prof Robert Barro
Prof Michael Bliss
Prof Jean-Pierre Centi
Prof John Chant
Prof Bev Dahlby
Prof Erwin Diewert
Prof Stephen Easton
Prof JC Herbert Emery
Prof Jack L Granatstein
Prof Herbert G Grubel
Prof James Gwartney
Prof Ronald W Jones
Dr Jerry Jordan
Prof Ross McKitrick
Prof Michael Parkin
Prof Friedrich Schneider
Prof Lawrence B Smith
Dr Vito anzi
Prof Armen Alchian
Prof James M Buchanan dagger
Prof Friedrich A Hayek dagger
Prof HG Johnson
Prof FG Pennance
Prof George Stigler dagger
Sir Alan Walters
Prof Edwin G West
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