An Overview of the World’s Largest Trade Relationship
Dr. Steven Globerman, Director, Center for International Business, College of Business & Economics, WWU
2019 Election| Global Trade and Protectionism| Canada| May 2019paul young cpa, cga
Canada depends on exports as such needs fair and equitable trad deals to expand business opportunities for Canadian Businesses
Canada is going to more regulations and higher taxes as compare to countries like the USA which are focusing on reducing both taxes and regulations
Canada is pushing clean technology at all costs through funding of clusters as well as other funding programs
Canada is pushing social issues on all trade deals. Countries are balking at social issues.
Canada is less competitive today than back in 2015. Trudeau has decided to hike taxes for small business, raise CPP rates and force carbon tax/price for carbon on all provinces. Trudeau is using the same model that drove out jobs in Ontario due hikes to hydro rates. - https://www.slideshare.net/paulyoungcga/business-competitivesness-canada-march-2019
2019 Election| Protectionism and Trade Policies| Canada and the World| May 2019paul young cpa, cga
1/4 for Canada's GDP is tied to exports. Canada depends on exports. The problem is the current government is not about progress as they are not focusing on all aspects the economy.
WTO needs to reform to ensure that emerging markets play by fair trade and investment rules.
The United States is a highly developed country, with the world's largest economy by nominal GDP and second-largest economy by PPP. Though its population is only 4.3% of the world total, Americans hold nearly 40% of the total wealth in the world.
2019 Election| Global Trade and Protectionism| Canada| May 2019paul young cpa, cga
Canada depends on exports as such needs fair and equitable trad deals to expand business opportunities for Canadian Businesses
Canada is going to more regulations and higher taxes as compare to countries like the USA which are focusing on reducing both taxes and regulations
Canada is pushing clean technology at all costs through funding of clusters as well as other funding programs
Canada is pushing social issues on all trade deals. Countries are balking at social issues.
Canada is less competitive today than back in 2015. Trudeau has decided to hike taxes for small business, raise CPP rates and force carbon tax/price for carbon on all provinces. Trudeau is using the same model that drove out jobs in Ontario due hikes to hydro rates. - https://www.slideshare.net/paulyoungcga/business-competitivesness-canada-march-2019
2019 Election| Protectionism and Trade Policies| Canada and the World| May 2019paul young cpa, cga
1/4 for Canada's GDP is tied to exports. Canada depends on exports. The problem is the current government is not about progress as they are not focusing on all aspects the economy.
WTO needs to reform to ensure that emerging markets play by fair trade and investment rules.
The United States is a highly developed country, with the world's largest economy by nominal GDP and second-largest economy by PPP. Though its population is only 4.3% of the world total, Americans hold nearly 40% of the total wealth in the world.
Canada is putting on a brave face, but it is looking more and more like the USA and Mexico will say here is the deal. Freeland can say what she wants, but she is not negotiating from a position of strength!
Justin Trudeau felt a social license for oil which includes carbon tax would lead to the promise land when it comes to UN (i.e. agenda 2030) - https://www.slideshare.net/paulyoungcga/agenda-2030-sustainable-development
Canada is the 4th largest oil producing country with a strong environmental and humans right record. So, why is Trudeau not pushing oil to the word?
Canada could eliminate the oil sands today and it would do nothing for global emissions
There needs to be a broader discussion on natural resources management including all aspects of the environment along with human rights.
UN needs to stop pushing Agenda 2030 at all cost.
Oil and Gas jobs pay 40% on average more than service sector jobs - https://www.slideshare.net/paulyoungcga/wages-canada-analysis-and-commentary-february-2019
In the next 15-20 years, China is on track to become the world's largest economy. India will be "neck and neck" with the U.S. in second place. How did this happen? How will this affect our lives? Is it too late to change the course? What can we do about it?
USA and Mexico have been working on resolving issues like Automotive.
Canada has not been at table directly with Mexico and USA as both those countries shunned Canada.
Canada - Fiscal Management - Deficit and Debt - January 2022.pptxpaul young cpa, cga
Canada heads to a very difficult time with a government that solely focus on its progressive agenda and climate change. The government continues push forward with new programs despite a structural deficit that has not been addressed since the December 2019.
Manufacturing is a key are for both countries. USA government policies have focus on cuts to both taxation and regulations as compare to Canada government policies which are more focused on increasing both taxation and regulations.
(2015) Teaching about the World’s Largest Trade Relationship (18.9 MB)K-12 STUDY CANADA
2015 STUDY CANADA presentation by Steven Globerman, Director, Center for International Business, College of Business and Economics, Western Washington University
Canada is putting on a brave face, but it is looking more and more like the USA and Mexico will say here is the deal. Freeland can say what she wants, but she is not negotiating from a position of strength!
Justin Trudeau felt a social license for oil which includes carbon tax would lead to the promise land when it comes to UN (i.e. agenda 2030) - https://www.slideshare.net/paulyoungcga/agenda-2030-sustainable-development
Canada is the 4th largest oil producing country with a strong environmental and humans right record. So, why is Trudeau not pushing oil to the word?
Canada could eliminate the oil sands today and it would do nothing for global emissions
There needs to be a broader discussion on natural resources management including all aspects of the environment along with human rights.
UN needs to stop pushing Agenda 2030 at all cost.
Oil and Gas jobs pay 40% on average more than service sector jobs - https://www.slideshare.net/paulyoungcga/wages-canada-analysis-and-commentary-february-2019
In the next 15-20 years, China is on track to become the world's largest economy. India will be "neck and neck" with the U.S. in second place. How did this happen? How will this affect our lives? Is it too late to change the course? What can we do about it?
USA and Mexico have been working on resolving issues like Automotive.
Canada has not been at table directly with Mexico and USA as both those countries shunned Canada.
Canada - Fiscal Management - Deficit and Debt - January 2022.pptxpaul young cpa, cga
Canada heads to a very difficult time with a government that solely focus on its progressive agenda and climate change. The government continues push forward with new programs despite a structural deficit that has not been addressed since the December 2019.
Manufacturing is a key are for both countries. USA government policies have focus on cuts to both taxation and regulations as compare to Canada government policies which are more focused on increasing both taxation and regulations.
(2015) Teaching about the World’s Largest Trade Relationship (18.9 MB)K-12 STUDY CANADA
2015 STUDY CANADA presentation by Steven Globerman, Director, Center for International Business, College of Business and Economics, Western Washington University
Aéro Montréal, Quebec's aerospace cluster, is a strategic think tank created in 2006 that groups all the major decision makers in Quebec's aerospace sector, including companies, educational and research institutions, associations and unions.
Aéro Montréal's mission is to mobilize industry players around common goals and concerted actions to increase the cohesion and optimize competitiveness of Quebec’s aerospace cluster. It aims to foster the growth and expansion of the cluster to ensure that it may continue to create wealth for Montreal, Quebec and Canada. Over the years, Aéro Montréal adopted a strategic action plan that includes the creation of working groups. These working groups are dedicated to six areas of intervention, namely supply chain development, branding and promotion, innovation, human resources, defense and national security and commercialization and market development.
The US, and the State of New Hampshire, sent a delegation to the 4th edition of the Aerospace Innovation Forum, to explore their participation with the industry's global leaders and the latest developments in the lifecycle management of new aircraft platforms.
Summary:
• Canada's trade surplus narrowed in April, as the surplus in goods trade led the decline. Services trade also contributed to the move, as travel restrictions were lifted in Canada.
• Going forward, we see an improvement in the trade balance as higher commodity prices should support Canadian exports. Furthermore, easing supply chains should open the way for further gains in manufacturing exports.
Source - https://economics.td.com/ca-international-trade
TRADING WITH CANADA? What you need to know about the new USMCA Trade AgreementJenniferKelley47
A free and informative webinar to learn more about the new U.S.-Mexico-Canada Agreement (USMCA) trade agreement and how you can benefit from importing and exporting to Canada. The USMCA provides a strong incentive for businesses in our neighboring countries to find new customers across our borders through exports while supporting jobs here in the United States.
Electrical Vehicle Adoption - Analysis and Commentary - April 2023.pptxpaul young cpa, cga
Blog – Zero Emissions and Hybrid Vehicles Analysis and Commentary – April 2023
Summary:
According to a recent poll, roughly four out of 10 adults in the U.S. who drive gas cars are at least somewhat likely to switch to EVs for their next vehicle purchase, as reported by the Chicago Tribune. The poll was jointly conducted by the Associated Press-NORC Center for Public Affairs Research and the University of Chicago’s Energy Policy Institute, and it suggests that there’s still some room to grow when it comes to both charging infrastructure and EV prices.
Source - https://insideevs.com/news/662932/poll-four-in-10-drivers-may-buy-electric-car-next/
Other sources:
Electrical vehicle sales hit 812K for the February 2023 - https://insideevs.com/news/661954/global-plugin-car-sales-february2023/
There continues to be an issue with lithium supplies and pricing - https://www.australianresourcesandinvestment.com.au/2023/04/19/why-2023-is-a-pivotal-year-for-lithium-prices/
Plug-in stations - https://www.myev.com/research/ev-101/what-it-costs-to-charge-an-electric-vehicle
Affordability is still an issue with electrical vehicles - https://www.americanenergyalliance.org/2023/04/biden-pricing-working-families-out-of-car-ownership/
Fire risks - https://www.9news.com/article/news/local/next/next-with-kyle-clark/firefighters-change-training-electric-battery-fires/73-0cd31447-74ca-4920-ab7c-a5e4aa19779e
Insurance Risks - https://insurancenewsnet.com/innarticle/bidens-call-for-evs-raises-questions-for-many-including-insurers
Supply chain - https://www.mining.com/supply-chain-problems-in-the-forecast-as-battery-metals-demand-surges-study/
Environmental - https://earth.org/lithium-and-cobalt-mining/
ESG - https://www.accountingtoday.com/news/coso-guidance-help-accountants-deal-with-esg-and-internal-controls
The Shifting Competitive Landscape for BC's Natural Resource IndustriesCheryl Maitland Muir
Jock Finlayson's presentation to the BC Natural Resources Forum looks at the economic contribution of resources to BC's economy. Spoiler Alert: Resources represent 13% of BC's GDP, 77% of merchandise exports and lumber remains our largest export product. Jock notes, however, that Canada is losing ground on our competitiveness, particularly compared to the United States.
Summary:
In August, Canada's merchandise exports decreased 2.9%, largely due to lower exports of energy products. Imports fell 1.7%, mainly on decreased imports of motor vehicles and parts. As a result, Canada's merchandise trade surplus with the world narrowed from $2.4 billion in July to $1.5 billion in August. This is the lowest monthly trade surplus observed to date in 2022.
Exports to countries other than the United States fell 4.3% in August. Exports to Hong Kong (gold), South Korea (coal and crude oil), the United Kingdom (crude oil and gold) and Japan (wheat, canola and copper) posted the largest declines.
Meanwhile, imports from countries other than the United States rose 1.1% in August. Higher imports from China (various products) and Belgium (pharmaceuticals) were partially offset by the decrease in imports from South Korea (light trucks and passenger cars).
The merchandise trade deficit with countries other than the United States widened from $8.3 billion in July to $9.2 billion in August.
Key facts:
a) Nearly $14B of the surplus is related to energy.
b) Canada continues to face challenges with near shoring of manufacturing
c) Canada needs to streamline regulations as part of getting goods out of the ground to market
d) Canada lacks ports and rail capacity to ship record levels of grains.
Source: https://www150.statcan.gc.ca/n1/daily-quotidien/221005/dq221005a-eng.htm
In order to expand applications into clean technology there is a requirement for rare metals. This presentation looks at clean technology raw materials market including issues facing the market.
COI1-1This is an optional chapter for assignment by inst.docxmonicafrancis71118
COI1-1
This is an optional chapter for assignment by
instructors who desire to cover international trade
early in the course but do not want to assign the more
graphical Chapter 37 (Chapter 20 in Macroeconomics
and Chapter 23 in Microeconomics) for that purpose.
If this updated Chapter 5 of Economics is assigned,
Chapter 37 should not also be assigned in the same
course. Much of the content in Chapter 5 of the 18e is
now in Chapter 37 of the 19e. In some places, the
transfer of content is word-for-word.
AFTER READING THIS CHAPTER, YOU SHOULD BE
ABLE TO:
1 State several key facts about U.S. international
trade.
2 Define comparative advantage and explain how it
relates to specialization and international trade.
3 Explain how exchange rates are determined in
currency (foreign-exchange) markets.
4 Explain how and why government sometimes
interferes with free international trade.
5 Describe the purpose and function of the World
Trade Organization and discuss trade topics such
as trade adjustment assistance, offshoring of jobs,
and fair-trade products.
The United States in the
Global Economy
Backpackers in the wilderness like to think they are “leaving the world behind,” but, like Atlas, they
carry the world on their shoulders. Much of their equipment is imported—knives from Switzerland, rain
gear from South Korea, cameras from Japan, aluminum pots from England, sleeping bags from China,
and compasses from Finland. Moreover, they may have driven to the trailheads in Japanese-made Toyotas
or German-made BMWs, sipping coffee from Brazil or snacking on bananas from Honduras.
International trade and the global economy affect all of us daily, whether we are hiking in the wil-
derness, driving our cars, listening to music, or working at our jobs. We cannot “leave the world be-
hind.” We are enmeshed in a global web of economic relationships, such as the trading of goods and
services, multinational corporations, cooperative ventures among the world’s firms, and ties among
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mcc11447_coi1_001-021.indd Page COI1-1 09/10/10 8:09 AM F-497mcc11447_coi1_001-021.indd Page COI1-1 09/10/10 8:09 AM F-497 204/MHCE015/atk75187_disk1of1/0073375187/atk75187_pagefiles204/MHCE015/atk75187_disk1of1/0073375187/atk75187_pagefiles
COI1-2
The United States and
World Trade
Our main goal in this chapter is to examine trade flows
and the financial flows that pay for them. What is the ex-
tent and pattern of international trade, and how much has
that trade grown? Who are the major participants?
Volume and Pattern
Table COI 1.1 suggests the importance of world trade for
selected countries. Many countries, with restricted re-
sources and limited domestic markets, cannot efficiently
produce the variety of goods their citizens want. So they
must import goods from other nations. That, in turn.
Canada NR is at the make-or-break point as world is need of key commodities like oil, LNG, lithium, food, and other commodities.
After over 6 years the Liberals are now focusing on the critical metal sector in Canada.
High commodity prices continue to benefit government revenues
India continues looks at ways to expand trade relations with Canada
Iran oil production has now hit pre-sanction levels
EMEA and USA continue to look at ways to wane EMEA off Russian oil and gas
Halifax port was sold a Singapore outfit
Shares in Tesla, General Motors Co. and Ford Motor Co. have each dropped in value by more than 40 per cent from their peak prices.
Which begs the question, are the automakers spending too much too soon on the EV revolution?
Will the Detroit Three automakers renege on their commitment to rebuilding the Ontario auto sector around EVs? And will there be industry-wide layoffs, as Musk signalled with his tweet that Tesla will have to reduce its workforce by 10 per cent?
The answer is no.
The EV industry is forecast by analytics firm BloombergNEF to account for about $67 trillion in economic activity between now and 2050 — one of the biggest business opportunities in history.
That staggering number is a rough estimate of the expense in replacing hundreds of millions of traditional internal-combustion vehicles over the next 30 years.
Worldwide, according to the EV Mobility Consumer Index, about 52 per cent of prospective car buyers want to purchase an EV — the first time that measure has ticked about 50 per cent. https://www.thespec.com/ts/business/opinion/2022/06/09/the-stock-market-might-disagree-but-the-world-is-fired-up-for-electric-vehicles.html
In June, Canada's merchandise exports increased 2.0%, mostly on crude oil and gold exports. Meanwhile, imports rose 1.7%, mainly on energy products. As a result, Canada's merchandise trade surplus with the world widened from $4.8 billion in May to $5.0 billion in June.
Consult the "International trade monthly interactive dashboard" to explore the most recent results of Canada's international trade in an interactive format.
Source - https://www150.statcan.gc.ca/n1/daily-quotidien/220804/dq220804a-eng.htm
Similar to An Overview of the World’s Largest Trade Relationship (20)
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An Overview of the World’s Largest Trade Relationship
1. Teaching About the
World’s Largest Trade Relationship
(and Why the Relationship is Important)
Study Canada Summer Institute 2016
Dr. Steven Globerman
Source:http://sbadrinath.files.wordpress.com/2009/03/different26rqcu3.jpg?w=400&h=226
1
2. Some Questions of Interest
• Why is Canada so important to the U.S.?
• What is the nature of bilateral trade and investment?
• Why are trade and investment so beneficial to both
countries?
• What are the “border priorities” of Canada and the
U.S.?
2
3. 1. Canada is our largest trading
partner ….
Barely, if one includes trade in services
with trade in goods
3
4. 1. … and we share the world’s
largest bilateral trading
relationship.
But not many people know this.
4
9. 9
Total U.S. Exports Plus Imports of Goods
and Services ($ billions - 2015)
Country Total Percent of Total
Canada 669.4 13.3
China 664.4 13.2
Mexico 592.6 11.8
Japan 272.0 5.4
Germany 236.9 4.7
UK 234.9 4.7
Korea (South) 148.5 3.0
France 114.8 2.3
10. 10
Total U.S. Trade
($ billions - 2015)
Exports Imports
Goods and Services 2,261 2,762
Goods 1,503 2,248
11. 11
Country Shares of Total U.S. Goods Trade
(2015)
China 16.0%
Canada 15.4%
Mexico 14.2%
Japan 5.2%
Germany 4.7%
Korea (South) 3.1%
UK 3.0%
12. China displaced Canada as the
United States’ largest trading
partner in goods in 2015
12
21. 2. Canada is the most
important export destination
for 70% of the 50 states
(but Midwest states are particularly
dependent on trade with Canada)
21
26. 26
Time Trend for Canada’s Share of U.S. Trade
% of U.S. Imports % of U.S. Exports
1990 18.4 21.6
1996 19.4 21.9
2000 18.7 22.7
2006 16.1 22.1
2010 14.3 19.3
2014 14.7 19.2
2015 13.2 18.7
Source: Globerman and Storer (2015), “An Assessment of Bilateral Trade
Flows and Their Implications for U.S. Border Infrastructure Investment”
27. 27
Summary
• Canada’s share of U.S. trade has been declining
since 2000
• This largely reflects the growth of Chinese exports to
the U.S. and Mexican exports (to a lesser extent)
• But will China’s exports to U.S. start to level off (or
even decline)?
• Growing number of trade actions against China
• Hostility to state-owned enterprises
28. 28
Top Commodity Exports to Canada (2015)
(U.S. $billions)
Industry 2015 Percent of Total
Exports to Canada
Motor Vehicles and Parts 47.6 16.9
Machinery 42.8 15.3
Electronic Equipment 24.8 8.8
Oil 21.3 7.6
Plastics 12.6 4.5
Medical & Technical
Equipment
8.5 3.0
Aircraft 7.8 2.8
Iron and Steel Products 6.2 2.2
Furniture 5.1 1.8
Paper 4.9 1.7
29. 29
Top Commodity Imports from Canada (2015)
(U.S. $billions)
Industry 2015 Percent of Total
Imports from Canada
Oil 74.8 25.3
Motor Vehicles and Parts 55.7 18.8
Machinery 20.1 6.8
Plastics 10.8 3.6
Wood Products 8.6 2.9
Aircraft 8.4 2.8
Electronic Equipment 7.6 2.6
Aluminum 7.3 2.5
Paper 6.6 2.2
Gems and Precious Metals 6.4 2.1
30. 30
Interesting Observation
• The leading “import industries” are also often leading “export
industries”
Cases in Point
Motor Vehicles and Parts
Mineral fuels
Machinery
Electrical Equipment
Aircraft
Plastics
This identifies the phenomenon of intra-industry trade (IIT) – more
later
31. 31
Types of IIT
Example of Vertical:
Canada exports crude oil to U.S.; U.S. exports refined
petroleum products to Canada
Example of Horizontal:
Canada exports compact cars to U.S.
U.S. exports SUVs to Canada
32. 32
Where Goods Cross the Border
U.S. Port Share of Total Imports
from Canada
1. Detroit, MI 27%
2. Port Huron, MI 19%
3. Buffalo-Niagara Falls, NY 17.5%
4. Champlain-Rouses Point, NY 6.2%
5. Pembina, ND 4.7%
6. International Falls, MN 4.1%
7. Blaine, WA 3.7%
These 7 land ports process 55.5% of all imports from Canada.
33. 33
General Benefits of Trade
1. Specialization by Industry
(Countries specialize in what they do most efficiently
relative to other countries)
2. Specialization by Product
(Companies specialize in a limited number of products
to gain economies of scale)
Trade makes countries wealthier through the phenomenon of
specialization.
The majority of trade is carried out by multinational corporations.
Almost half of this latter trade is intra-firm.
So foreign direct investment is important.
34. 34
Not Everyone Benefits from Increased Trade
• There will be contractions in specific sectors of
the economy with losses of employment
• How important is this phenomenon?
35. 3. Canada is the biggest
source of U.S.
petroleum imports
35
36. 36
U.S. Crude Oil Imports (2015)
(1,000 barrels per day)
Country Volume
Canada 3,223
Saudi Arabia 915
Mexico 761
Venezuela 717
Colombia 413
37. 37
U.S. Exports of Oil to Canada
Are Growing Rapidly
In 2015, U.S. exported around 154.2 million
b/d of crude oil to Canada. The U.S.
exported 48.7 million b/d in 2013.
38. 38
Other “Energy Facts”
• Canada is responsible for almost all U.S. imports
of natural gas
• Canada accounts for all of U.S. imports of
electricity
• Canadian exports account for around 13 percent
of U.S. coal imports
43. 43
The “Take-Aways”
The oil sands project is a major economic asset for
Canada
Canadian oil companies have large sunk costs in the
project
Environmentalists see the project as a nightmare –
perhaps the single most controversial
economic activity in North America
U.S. Government has blocked building of Keystone
Pipeline
50. 50
The Flies in the Ointment
• Native groups are opposed to oil pipeline
proposals in Canada
• Where they have legal title to their land,
they can block construction unless federal
government is willing to invoke eminent
domain
• China’s growth is slowing. Will they need
natural resources to the extent previously
forecast?
52. The Economist’s Solution
• GHG Emissions are an “external cost”
• Internalize the “externality”
• Put a price on carbon emissions
• Use will reflect the full costs
Problem: The externality crosses national boundaries.
Countries must cooperate (not likely given Kyoto accord
experience)
52
53. 4. Canada has a diversified
economic base, but it has
struggled to develop a thriving
high technology sector
53
54. 54
GDP Shares, March 2016
Sector $ CDW (billions) Percentage
Services 1,174.5 70.4
Real Estate 217.8
Finance 117.2
Health Care 113.4
Manufacturing 174.8 10.5
Mining 132.5 7.9
Construction 115.7 6.9
Utilities 37.6 2.3
Primary 33.3 2.0
59. 59
Canada’s Banking Sector as a Paragon
• Canada avoided the sub-prime mortgage-related economic
meltdown that hit the U.S. in 2008
• Many credit Canada’s banking regulations as the reason that
Canada avoided the financial sector bankruptcies and mortgage
default experiences of the U.S.
• Also, Canada did not experience the severe recession from
2008-2009 that the U.S. experienced
• However, Canada’s overall productivity performance continues to
lag that of the U.S.
• Since 1984, business sector productivity in Canada has
grown at half the U.S. rate
60. 5. Canada-U.S. trade is
often about trading
“apples for apples” and
“making things together”
(Recall intra-industry trade)
60
65. SeaTac Airport Shuttle Trains:
Made in PA by a Canadian Company
•Source: http://farm4.static.flickr.com/3379/3198460812_79dd9093c2.jpg
65
66. Foreign Direct Investment
Seatac shuttle trains illustrate important phenomena:
1. There are many Canadian companies
operating affiliates in the U.S. and likewise for
U.S. companies;
2. A significant share of trade between the two
countries is intra-firm trade.
66
67. 6. The Canadian government
has done a lot to improve
business conditions in Canada
67
68. Some Measures Taken by
Federal Government
68
• Lowered corporate tax rates
• Improved incentives for innovation
• Reduced government debt/GDP ratio
•Privatized Crown Corporations
•Free trade agreements
• NAFTA
•European Union
•Bilateral
72. Unemployment Rates
72
• Canada had lower unemployment rate than
the U.S. from 2008-2013
• May 2015 unemployment rates:
Canada = 7.1%
U.S. = 4.4%
73. High Ratio of Household Debt to
GDP is a Potential Problem for
Canada
73
• Largely related to mortgage
borrowing given relatively high
housing prices to income in major
Canadian cities.
75. High Ratio of Household Debt is
Seen as a Big Risk Factor for
Canadian Economy
75
• Bank of Canada is concerned about
a housing “bubble”
• Required down-payments on house
purchases have been increased (up
to 20%)
76. Canada Has a More Equal Distribution
of Income Than the U.S.
76
• Tax-transfer system is more
“progressive”
• Larger share of government funding
for services such as health care;
education
77. Top 1% Share of Income
77
U.S. (2014) = 21.2%
Canada (2013) = 10.3%
79. 79
Stocks of Foreign Direct Investment (2014)
Outward
(Canada)
Country Millions CDN $ Percentage of Total
U.S. 349,965 42
Other 478,847 58
Inward
(Canada)
Country Millions CDN $ Percentage of Total
U.S. 361,372 49
Other 370,891 51
80. By contrast, Canada accounted for slightly
less than 10 percent of the stock of foreign
direct investment in the U.S. in 2014.
U.S. direct investment in Canada
accounted for around 8 percent of the
stock of U.S. outward foreign direct
investment in 2013.
80
81. Canadian banks have recently been
large investors in the U.S.
e.g. In 2015, the Royal Bank of
Canada purchased the largest
private wealth management bank
in L.A. (lots of movie stars’
money).
81
82. 8. Canada has a long history
of protecting its economy from
U.S. competition
82
86. 86
Some Important Elements of
Protection Still Exist
• Very high tariffs on dairy and poultry
• Canadian content rules for broadcasters
• Foreign investment restrictions in a number
of sectors including banking,
telecommunications and transportation
•North American Content Rules
87. 9. Canadians and Americans
have different “border
priorities”
87
88. Canadian Priorities
88
U.S. Priorities
• Security (terrorism)
• No “undue” border procedures
• Relatively quick inspection of commercial
goods
• Relatively lenient visa permitting
• Border infrastructure (second crossing for
Detroit-Windsor)
93. 93
The Canadian Dilemma
• U.S. is a very important market for Canadian
exports
• But Canada has been “losing share” in U.S. market
• Should Canada try to diversify its markets, e.g.
emphasize growing its trade with Asia?
• Should Canada “double-down” and make even
greater efforts to increase trade with the U.S.?
98. 98
Overall Conclusions
• Bilateral economic relationship remains of major
importance
• But direction of relationship is unclear
• Separate negotiations for free trade agreement
with EU
• Presidential candidates’ rhetoric about “unfair”
trade agreements
• TPP seems unlikely to be implemented
• Hostility to fossil fuels