Canada Macroeconomics

By
Gadiel Melendez
 The Canada-U.S. trade and
investment partnership
• Canada and the United States enjoy an economic partnership unique in the
contemporary world. They share one of the world's largest and most
comprehensive trading relationships, which supports millions of jobs in each
country. Since the implementation of the Canada-U.S. Free Trade
Agreement in 1989, two-way trade has tripled. Under NAFTA, growth in
bilateral trade between Canada and the U.S. has averaged almost 6.0%
annually over the last decade. In 2006, their bilateral trade in goods and
services was $577 billion, with over $1.6 billion worth of goods and services
crossing the border every single day.

• Canada's trade with the United States is equivalent to 53% of CA GDP. The
United States represents roughly 4/5 of Canada's exports and over 1/2 of
the imports. Canada, in return, represents 22.2% of America's exports and
16.5% of its imports. To date, Canada is the number one foreign market for
goods exports for 36 of the 50 states, and ranked in the top three for
another 4 states. In fact, Canada is a larger market for U.S. goods than all
27 countries of the European Union combined, which has more than 15
times the population of Canada.
 What is NAFTA?
• North American Free Trade Agreement (NAFTA) is a regional trade agreement -
Canada, Mexico, and US.

• Much of NAFTA is structured as three separate bilateral agreements: (i) Canada and
US; (ii) Mexico and US; (iii) Canada and Mexico.

• Canada-US free trade agreement (CUSTA), took effect January 1, 1989 -

subsequently subsumed into NAFTA.

• Presidents Bush and Salinas agreed in 1990 to pursue negotiation of a free trade
agreement between US and Mexico, Canada joining negotiations in 1991.

• (ii) and (iii) found in NAFTA itself, took effect January 1,1994 during first Clinton
administration
 What is NAFTA?
• Signed by the US, Canada, & Mexico in the mid-
1990s
• Eliminated trade barriers between the 3
countries
• Free Trade between the 3 countries
• How has it affected Canada’s economy?
– It eliminated trade barriers with US & Mexico, and
allows them to trade more freely at a better cost
 Canada’s Industries
• What’s being produced in the factories?
 Transportation equipment, chemicals, processed
and unprocessed minerals, food products, wood
and paper products, fish products, petroleum,
natural gas.
 Canada’s Natural Resources
• What’s available?
Iron ore, nickel, zinc, copper, gold, lead,
molybdenum, potash, diamonds, silver, fish,
timber, wildlife, coal, petroleum, natural gas,
hydroelectric power.
Which country is Canada’s
biggest trading partner?
Canada’s main exports partners
• Canada’s main exports partners are:

• United States
• European Union
• South Korea
• China
 Canada’s Exports
• Chief exports:
• Exports total (2009): $431.1 billion
Top expoMotor vehicles & parts, industrial
machinery, aircrafts, telecommunications
equipment, chemicals, plastics, fertilizers, wood
pulp, timber, crude petroleum, natural gas,
electricity, aluminum.
Exporting partners: US (79.3%), UK (2.8%), China
(2.1%)
 Canada Exports
• Before the creation of the Bank, the federal government and
the early banks issued notes designed to circulate a Canada
exports were worth 430.0 Billion CAD in February of 2009.
International trade makes up a large part of the Canadian
economy. Exports amount to more than 45% of its GDP.
Canada is one of the few developed nations that are a net
exporter of energy. Canada also exports motor vehicles and
parts, industrial machinery, aircraft, telecommunications
equipment and electronics. The United States is by far its
largest trading partner, accounting for about 79% of exports.
Exports
Exports of goods on a balance-of-payments basis, by
product
Services Exports
Canada’s main imports partners
Canada’s main imports partners are:
• United States
• European Union
• China
• Mexico
 Canada’s Imports
• Chief imports;
Machinery & equipment, motor vehicles & parts,
crude oil, chemicals, electricity consumer goods.

Imports total (2009): $386.4 billion

Top importing partners: US (54.4%), China (9.4%),

Mexico (4.2%)
 Canada Imports
 Canada imports were worth 32.6 Billion CAD in February of 2010. Canada
imports mostly machinery and equipment, motor vehicles and parts,
electronics, chemicals, electricity and durable consumer goods.
Imports
Imports of goods on a balance-of-payments basis, by
product
Principal Commodity
 Canada Balance of Trade

• Canada reported a balance of trade surplus equivalent to 1.4

Billion CAD in February of 2010. International trade makes up
a large part of the Canadian economy. Exports amount to
more than 45% of its GDP. The United States is by far its
largest trading partner, accounting for about 79% of exports
and 54% of imports as of 2009. Canada is one of the few
developed nations that are a net exporter of energy. Canada
imports mostly machinery and equipment, motor vehicles and
parts, electronics, chemicals, electricity and durable
consumer goods.
Trading Partners
Balance International
Payments 
Balance payments
Canada's balance of international payments
 US CANADA
Trading Partners - US: Canada: US is Canada's
Exports / Imports 75.5% / 63.4% 17.1% / 16% largest trading
partner. Canada is
UK: China: US' largest trading
2.9% / 2.6% 5.2% / 16.1% partner.

Japan: Mexico:
2.4% / 2.6% 4 10.1% / 10.3%5
 Conclusion
 The results for Canada in its battle to uphold nondiscriminatory treatment are mixed. On one
hand, Canada has allowed overt discrimination to creep into its trade policy actions through the
formation of its DTAs. Furthermore, I have identified how Canadian antidumping policies may be
implicitly extending trade preferences on imports from the United States beyond the levels
already conferred under CUSFTA or NAFTA. On the other hand, there are areas in which the
Canadian government has successfully withstood interest group calls for additional
discrimination. By examining the cases of Certain Steel Goods, Bicycles, and Outdoor
Barbeques, I have illustrated three instances in which Canadian policymakers at the CITT
recommended the imposition of a trade restriction – through either application of a global
safeguard or a China-safeguard policy – that was structured in a manner which would have
implicitly granted U.S. exporters additional discriminatory (preferential) access to the Canadian
market beyond that which they already receive through NAFTA. While in each instance the
Canadian government declined to implement the proposal, continued vigilance against the
imposition of even these subtle forms of discrimination is important going forward .
 References
• http://www.tradingeconomics.com/World-E
conomy/Exchange-Rates.aspx

• www.bankofcanada.ca/en/

• http://www40.statcan.gc.ca/cbin/s234a.cgi
?se=balance
%20payments&lan=eng&dtype=fina
Questions?

THANK YOU