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									          CANADA AND THE UNITED STATES

TRADE & ECONOMIC RELATIONSHIP – CURRENT SITUATION




                        Presented to:

                  Dr. Kenneth N. Matziorinis




                             by




                      Majida Boutanios

                         Orlena Lee




            McGill Centre for Continuing Education

             North America and Global Economy

                        CPL2-561-781

                      February 20, 2003




                                                     1
 AN OVERVIEW OF CURRENT TRADE AND ECONOMIC RELATIONS BETWEEN
                                   CANADA AND THE U.S.

Canada and the U.S. enjoy a distinctive economic partnership. We share the world's largest and
most understanding trading relationship, which supports more than two million jobs in each
country. Two-way trade between Canada and the United States has more than doubled since
1994. Trade crossing the Canada-US border every single day account for US$1.2 billion, which
makes us each other's biggest trading partners. Canada represents 23% of the American
international market (US$165 billion). The United States sells almost three times as many goods
to Canada, a market of 30 million people, as to Japan, a market of over 125 million. Canada is a
larger market for US goods than all 15 members of the European Union combined. The United
States is the largest foreign investor in Canada and the most popular destination for Canadian
investment.

CANADIAN TRADE PERFORMANCE OVERVIEW (THIRD QUARTER 2002)

The Canadian economy continued to expand in the third quarter of 2002, with real gross domestic
product (GDP) increasing by 3.1% on an annualized basis. This growth rate was down from 4.4%
in the previous quarter. The United States, in contrast, registered 4.0% GDP growth in the third
quarter, up from 1.3% during the previous quarter, thereby outperforming Canada for the quarter.

A bounce back in exports coupled with a strong housing market supported Canadian economic
growth in the third quarter, while consumer spending was flat and business capital spending
slowed. Exports of goods and services increased by 10.8%, mainly due to a strong growth of
shipments to the U.S. particularly of motor vehicles and parts. Canada's continued economic
expansion also supported a broadly based 9.5% increase in imports. Export growth outpaced
import expansion in the third quarter, contrary to the previous quarter. In the third quarter, job
creation increased by 123,100 positions. The average unemployment rate in the third quarter rose
to 7.6% from 7.5% in the second quarter. The overall Consumer Price Index (CPI) increased by
2.3% compared with the same quarter last year, up from a 1.3% increase in the second quarter of
this year. The four-quarter increase in the CPI for core items (excluding food and energy) was
2.4%, up from the 2.2% recorded for the previous quarter. Thus, inflation-- the rate of change in
                     Canada-US Trade Relationship – Current Situation


the CPI--is on the rise. The Canadian dollar depreciated slightly vis-à-vis the U.S. dollar over the
third quarter--from US$0.6432 to US$0.6399 (See Appendix #1 for Canada and US’s Economic
and Trade Indicators third vs. second quarter of 2002).

Exports of Canadian goods and services increased by 10.8% in the third quarter, with
merchandise exports expanding by 12%. Imports of goods and services increased by 9.5%, with
merchandise imports rising by 11.4%. However, imports of services declined from the previous
quarter. Export growth was especially strong to the U.S. and to non-OECD countries. The trade
balance in the third quarter improved to $47.4 billion from $45.0 billion in the previous quarter.

Services exports increased by 2.5% in the third quarter--led by transport and travel services,
while commercial services exports declined. Overall services imports recorded a 0.3% decline
during the quarter. The service trade deficit of 10.1% recorded a fall by $400 million to $8.6
billion.



OVERALL VIEW OF CANADIAN-US TRADE


Canada buys nearly a quarter of all U.S. exports of goods. In 2001, the United States sold $163
billion worth of goods to Canada. Canada, bought an average of $5,254 worth of U.S. goods per
capita. The United States bought $219 billion worth of Canadian merchandise, approximately
$768 for every American.

Historically, Canada has been the leading foreign export market for U.S. goods. In the past 20
years, U.S. merchandise exports to Canada have quadrupled. In 2001, Canada was the leading
export market for 37 of the 50 states. The United States leads the world in the export of services,
ranging from computer software, to transportation, to professional expertise.

Canada continues to be a top customer, with purchases of $24 billion in 2001. U.S. exports of
services to Canada rose by 3% over the previous year, while its exports to the world fell by 4%.
Canada provided the United States with $18 billion worth of services in 2001. In recent years, the
United States has consistently posted a surplus in services trade with Canada, while Canada has
recorded a surplus in the exchange of goods.



                                                                                                     3
                      Canada-US Trade Relationship – Current Situation


In 2001, Canada's current account surplus decreased from $30 billion to $27 billion. The U.S.
current account with the world showed a negative balance of $393 billion, 14% of all its
international transactions.

Investment — inflows and outflows — is a key contributor to job creation and international
competitiveness. In 2001, a record $25 billion in new direct investment flowed into Canada from
the United States. The total U.S. stock in Canada at the end of the year amounted to $139 billion.
The United States is by far the largest foreign source of capital in Canada, accounting for 67% of
the total stock. This represented 10% of all U.S. direct investment abroad. The bulk of U.S.
investment in Canada, 39%, was in the manufacturing industries, led by transportation, which
made up 10% of the total. Finance, insurance and real estate together accounted for 27%, and
petroleum for 17%.

Canadian investors spent almost $17 billion to acquire or establish businesses in the United
States, more than any other country invested. Half of all Canadian direct investment abroad is in
the United States. At the end of 2001, Canada had an accumulated total of $109 billion invested
there, 8% of all foreign direct investment in the United States. Almost 37% was in the
manufacturing sector, led by machinery firms with 15% of the total. Finance, insurance and real
estate accounted for another 36%, and service industries for 5%.

Canada and the United States are involved in a profitable trade in automobiles, trucks and auto
parts. In 2001, transportation equipment accounted for almost a third of both U.S. merchandise
exports to and imports from Canada. U.S. manufacturers sold over $23 billion in motor vehicle
parts, engines and engine parts, and $13 billion worth of automobiles and trucks to Canada. The
United States bought $40 billion worth of autos and trucks and $14 billion in parts and engines
from Canada.

U.S. exports to Canada also included $12 billion in high-tech equipment, in particular, $6 billion
worth of computers and $2 billion worth of tubes and semi-conductors. The United States
supplied Canada with a variety of other goods, including $8 billion in agricultural products, $3
billion in pharmaceuticals, $2 billion in organic chemicals and $2 billion in paper.

Canada's energy exports to the United States totalled $35 billion in 2001. Exports included $17
billion in natural gas, $10 billion in crude petroleum, and $6 billion in petroleum and coal


                                                                                                     4
                     Canada-US Trade Relationship – Current Situation


products. In addition, Canada supplied close to 100% of U.S. electricity imports, worth $2
billion.

Canadian forest product exports amounted to $20 billion and included $6 billion in softwood
lumber and $5 billion in newsprint. The United States also purchased $8 billion in airplanes, their
engines and parts; $4 billion in aluminum and aluminum alloys; and $3 billion in office
machines.

CANADA’S TRADE WITH U.S. REGIONS

The U.S. is the destination of over 87% of Canadian merchandise exports and the source of two-
thirds of Canadian goods imports. For the purpose of our study, we will subdivide the United
States into four regions (South, West, Midwest and Northeast). Canadian exports to the U.S.
expanded by an average of 10.1% per annum from 1988 to 2001. Exports to the West and the
South grew faster than the overall pace and captured increasing shares. At the same time,
Canadian exports to the Northeast and Midwest declined. Nevertheless, the Midwest remains the
most important destination for Canadian exports to the U.S., accounting for 41.0% of overall
exports to that country in 2001.

In 2001, 63.1% of total Canadian imports originated from the US. Imports from the West
expanded at a level proportionate with overall Canadian import growth and therefore maintained
their share, about 11%, between 1988 and 2001. On the other hand, imports from the U.S.
Northeast and U.S. Midwest grew at a slower rate than the overall Canadian average. It was
Canadian imports from the U.S. South that expanded their share of total Canadian imports over
this period. Although the share of imports from the Midwest declined from 47.7% in 1988, it still
accounted for 43.1% of imports in 2001. The dominant role that the U.S. Midwest plays in
Canadian trade is largely due to the importance of motor vehicle trade with this region (See
Appendix #4, Table 2: Canada's Top Three Import and Export Commodities in United States
Trade). Motor vehicles and machinery are the largest traded commodity between Canada and the
United States. However, Trade in machinery is more evenly distributed across the four U.S.
regions, Canada-U.S. motor vehicle trade is very much in favour of the Midwest. Reinforcing this
dominance is the fact that the largest share of Canadian exports of mineral fuels is also shipped to
the Midwest.




                                                                                                   5
                      Canada-US Trade Relationship – Current Situation


The importance of the U.S. South for both Canadian exports and imports has been rising in recent
years. From 1988 to 2001, the share of Canadian mineral fuels exports to this region rose from
3.5% to 10.0%, while the share of machinery exports climbed from 20.4% to 26.0%. Motor
vehicle exports to the region accounted for about 4.6% in both 1988 and 2001. The U.S. South is
also an important source for all three of Canada's top import commodities. Between 1988 and
2001, the South increased its share of Canadian imports of motor vehicles from 10.2% to 18.7%.
Meanwhile, its share of machinery imports rose from 15.7% to 23.2%, and its share of electrical
machinery and electronics imports jumped from 23.3% to 33.8%.

The U.S. West region share of Canadian exports surpassed the share of the U.S. South in 2001.
From 1988 to 2001, its share of Canadian exports of motor vehicles increased from 3.1% to
15.1%, and its share of shipments of machinery rose from 8.6% to 16.0%. The West region is the
destination for about 1/4 of all mineral fuels exports to the United States. As a source for
Canadian imports from the U.S., the West saw only insignificant changes in its share of motor
vehicle and machinery imports, whereas its share of electrical machinery and electronics imports
increased from 11.3% to 16.9%.

The Northeast accounts for almost 1/4 of Canada's exports to the U.S. and almost 1/5 of imports
from the U.S., it has become less important to the Canadian trade. Canadian exports of mineral
fuels and machinery to the U.S. Northeast declined from 1988 to 2001, while the region's share of
Canadian motor vehicle exports fell from 22.2% to 6.6%. On the imports side, the Northeast saw
its share decline during the period from 11.3% to 5.3% for motor vehicles, from 19.2% to 15.4%
for machinery, and from 33.0% to 23.4% for electrical machinery and electronics.

TRADE IN GOODS AND SERVICES


In 1989, the United States and Canada signed the Free Trade Agreement (FTA) and in 1994, the
North American Free Trade Agreement (NAFTA) went into effect. Between 1989 and 1994,
bilateral trade increased by 50%.

According to the US Department of State, the major trade exports in 2001 for Canada are: motor
vehicles and spare parts, lumber, wood pulp and newsprint, crude and fabricated metals, natural
gas, crude petroleum, and wheat. 86% if 2001 Canadian exports went to the US. As for


                                                                                                  6
                      Canada-US Trade Relationship – Current Situation


merchandise imports, they totalled $226.4 billion, they are: motor vehicles and parts, industrial
machinery, crude petroleum, chemicals, agricultural machinery. 76% of 1998 Canadian imports
came from the US.

Canada and the United States adopted the Smart Border Declaration in December 2001 to ensure
the secure flow of goods and people across the Canada-U.S. border.

On March 5, 2002, U.S. President Bush announced that Canada would be excluded from U.S.
restrictions on imports of steel. Canada continued to manage effectively a number of key issues,
including softwood lumber and wheat. The following are some key points on major trade exports.

Energy

At $38 billion in 2001, U.S.-Canada trade in energy is the largest U.S. energy trading relationship
in the world. The primary components of U.S. energy trade with Canada are oil, natural gas, and
electricity. Canada is the United States' largest oil supplier and the fifth-largest energy producing
country in the world. Canada provides about 16% of U.S. oil imports and 14% of total U.S.
consumption of natural gas. The United States and Canada's national electricity grids are linked
and both countries share hydropower facilities on the Western borders.

Agriculture

The U.S. is Canada's leading agricultural market, taking nearly one-third of all food exports.
Conversely, Canada is the second-largest U.S. agricultural market (after Japan), primarily
importing fresh fruits and vegetables and livestock products (see appendix #6 for major US
agricultural imports from Canada). US agricultural exports to Canada totalled $7.6 billion in
2000. Major Canadian imports from the United States are fruits and vegetables (31 percent),
animals and animal products (19 percent), and grain and feeds (18 percent). Canada is the largest
export market for U.S. fruits and vegetables, with a total value of $794 million and $1,578.5
million, respectively, in 2000.

Of Canada's $27 billion in exports of wood, pulp, and paper in 2001, 80% went to the United
States.

Steel



                                                                                                   7
                      Canada-US Trade Relationship – Current Situation


On March 5, 2002, President Bush announced a major decision to exclude Canadian exports from
restrictions on U.S. imports of a number of steel products.

The decision ended eight months of uncertainty for Canadian steel producers, which means that
Canadian exports will continue to flow unimpeded to U.S. customers. Of total Canadian steel
exports of $3.6 billion, import restrictions could have been imposed on exports of six products
valued at about $1.86 billion.

Services

In recent years, Canadian professional services providers (e.g. engineers, accountants, architects,

legal consultants and geologists) have increasingly exported their expertise abroad. Canadian

engineering consulting firms rank among the leaders in total international billings. Canadian law

firms are well placed to take advantage of business opportunities worldwide, as Canada functions

within the two main law regimes (common law and civil law). Canadian accounting firms are

moving to develop international alliances in addition to the national or interprovincial affiliations

that some have established. Our architectural firms have undertaken projects in areas in which

they are recognized world experts (school buildings, airports, Arctic design and construction

technology, and office complexes) and are particularly active in the Asia-Pacific region.


Canada has evolved from a rural, commodity-based economy to an urban services-dependent

economy with a large manufacturing base. Since Canada is the largest export market for 35 to 50

States, the U.S.-Canada border is extremely important to the well-being and livelihood of

millions of Americans.




                                                                                                   8
                      Canada-US Trade Relationship – Current Situation


MAJOR TRADE ISSUES BETWEEN CANADA AND THE US
Lumber
Softwood lumber is one of Canada's largest exports to the United States, with over 18.6 billion
board feet of lumber shipped in 2001 alone. Those exports were worth $9.4 billion (US$6.1
billion) and comprise an important element of the largest trading relationship in the world.


On April 2, 2001, following the expiry of the 5-year Canada-US Softwood Lumber Agreement,
the US lumber industry requested the US Dept. of Commerce to investigate the countervailing
and anti-dumping of softwood lumber products in Canada, which was accepted. In October 2001,
dumping margins was established at 12.58% for all Canadian exports to the US.


This trade matters to both Canadians and Americans. Canadian sawmills employ over 80,000
Canadians, and roughly 300 communities are dependent upon the forestry sector. U.S. lumber
producers cannot meet domestic demand for softwood lumber: therefore, Canada now supplies
over a third of the United States' consumption of this product. The U.S. housing and other
industries, which employ over 7 million American workers, have come to rely upon unfettered
access to this quality product.


Resolving the softwood lumber dispute remains a top Canadian trade priority. To this end, the
Canada has challenged the U.S. determination of subsidy before the World Trade Organization
and under the North American Free Trade Agreement, and has held WTO consultations
concerning the U.S. determination of dumping. At the same time, the Canadian government
remains open to discussions with the United States for a mutually acceptable solution to this
dispute.

Canada produces about 28 billion board feet of softwood lumber annually and 18.3 billion board
feet were exported to the United States in 2000. Thirty-five percent of the softwood lumber used
in the US comes from Canada, the world’s second-larges producer behind the US.

The US has blamed low prices on Canadian imports of softwood lumber, which is made from fir,
pine and other cone-bearing trees. Therefore, the US government has added duties and tariffs of
about 32% of the cost of most Canadian softwood. While US lumber companies benefit from the


                                                                                                   9
                      Canada-US Trade Relationship – Current Situation


new duties on Canadian imports, other US industries using such materials lose out because they
are forced to pay higher prices.

US Farm Bill

On Feb. 13 2002, the US Senate passed its version of a new Farm Bill. The Senate version would
provide for increased spending on production-distorting subsidies, reinstate abandoned ones (e.g.
for honey) and extend them to new commodities such as peas and lentils. The Senate Bill would
also require mandatory retail-level country-of-origin labelling for meats, as well as fruits and
vegetables, and deny U.S. grading to U.S. meat obtained from Canadian animals slaughtered in
the United States. Canada has expressed serious concerns about the Farm Bill proposals, in
particular, the increase in trade-distorting domestic support, and provision on meat grading and
the mandatory country of origin labelling requirements.

Agricultural Subsidies

All WTO members have agreed to decrease domestic support of agriculture; however, the US has
not respected this decision and continues to increase spending on trade-distorting forms of
support in this field. Canada is concerned about the high and rising levels of domestic support to
agriculture in the US, especially to grains and oilseeds production, which contributes to the
worldwide supply-demand imbalance that keeps prices down. Since the US is subsidizing the
export of its agricultural products, they have a price advantage over other countries. Therefore,
Canada is fighting to keep prices down.

P.E.I. Potatoes

On October 31 2000, U.S. Department of Agriculture (USDA) restricted the access of Canadian
potatoes to the US because warts were discovered on certain potatoes in one field in PEI,
following the confirmation by the Canadian Food Inspection Agency (CFIA). The USDA’s
restrictions on the movement of PEI potatoes were deemed to be unjust by the CFIA. In April
2001, both organizations finalized a set of conditions that provided subsequent PEI potato crops
with limited access to the US. However, there are still some remaining issues and CFIA
continues to work with the USDA to resolve this so that the export of potatoes will no longer be
under strict surveillance.



                                                                                                    10
                       Canada-US Trade Relationship – Current Situation


Exports of Meat

Cattle producers in the US have been pushing for mandatory country-of-origin labelling of meat.
In the US, cattle born and raised in the U.S. would have to be labelled as U.S. beef. Such a rule
would require mandatory country-of-origin labelling and would increase Canada’s import costs
of buying and processing imported meat. What about identifying animals born in Canada but
raised and slaughtered in the U.S. How would you be able to label that? Canada is opposed to this
labelling process.

Wheat

The Government of Canada is disappointed with the decision of the U.S. Department of
Commerce to pursue investigations into Canadian wheat trade policies and the practices of the
Canadian Wheat Board (CWB). The North Dakota Wheat Commission made allegations of unfair
trading by Canada. Canadian authorities will continue to defend Canada’s policies in the wheat
sector, including responding to U.S. pressure in the WTO negotiations regarding the issue of state
trading enterprises.

Telecommunications

Some Canadian services providers have encountered problems and lengthy problems in obtaining
licences to provide telecommunications services in the US. Consequently, Canada will continue
to carefully monitor US implementation of its WTO commitments with respect to
telecommunications services to ensure that Canadian services providers are subjects to timely and
transparent licensing procedures.


This is a brief overview of the current trade situation between Canada and the U.S.




                                                                                                    11
                 Canada-US Trade Relationship – Current Situation


APPENDIX #1


                      Canada's Economic and Trade Indicators
                             Percent Change at Annual Rates
                   Third Quarter 2002 over Second Quarter 2002
Source: Statistics Canada
GDP (current$)     ($B) (third quarter 2002)                        1151.832
Real GDP (annualized)                                               3.1
Employment (quarterly increase, level)                              123,100
Rate of Unemployment (quarterly average)                            7.6
Consumer Price Index (third quarter 2002 over third quarter 2001)
All Items                                                           2.3
Core (excludes food and energy)                                     2.4
Canadian $ in U.S. funds (quarterly average, level)                 0.6399
Exports of Goods and Services (annualized, current dollars)         10.8
Imports of Goods and Services (annualized, current dollars)         9.5


                            US Economic and Trade Indicators
                             Percent Change at Annual Rates
                                   Third Quarter 2002
Source: Statistics Canada
GDP (current$)     ($B) (third quarter 2002)                         9,485.6
Real GDP (annualized)                                                4.0
Employment (quarterly increase, level)
Rate of Unemployment (quarterly average)                             5.9
Consumer Price Index (third quarter 2002 over third quarter 2001)
Core (excludes food and energy)                                     2.0
All Items                                                            2.4



                                                                               12
                  Canada-US Trade Relationship – Current Situation


APPENDIX #2


Gross domestic product at basic prices by industry1


                                                                   Change         Change
                                  Same
                                             Previous November      from         from same
                                  month
                                             month      2002       previous      month last
                                 last year
                                                                   month           year
                                   $ constant 1997 (millions)2                %
All industries                    950,375     983,883    984,401           0.1            3.6
Goods-producing industries
Agriculture, forestry, fishing
                                   20,277      19,457     19,696           1.2          -2.9
and hunting
Mining and oil and gas
                                   36,176      36,025     36,225           0.6            0.1
extraction
Manufacturing                     157,825     166,757    166,922           0.1            5.8
Construction industries            50,989      53,113     53,225           0.2            4.4
Utilities                          27,017      28,671     28,164        -1.8              4.2
Services-producing
industries
Transportation and
                                   43,483      44,655     44,686           0.1            2.8
warehousing
Information and cultural
                                   43,677      45,969     46,114           0.3            5.6
industries
Wholesale trade                    54,898      58,760     58,769           0.0            7.1
Retail trade                       53,849      55,516     54,887        -1.1              1.9
Finance and insurance, real
                                  190,252     194,655    194,793           0.1            2.4
estate and renting and




                                                                                          13
                  Canada-US Trade Relationship – Current Situation


leasing and management of
companies and enterprises
Professional, scientific and
                                  44,261   45,806     45,938         0.3         3.8
technical services
Administrative and support,
waste management and              20,413   21,624     21,737         0.5         6.5
remediation services
Public administration             54,598   55,884     56,023         0.2         2.6
Educational services              43,934   44,529     44,545         0.0         1.4
Health care and social
                                  55,594   57,511     57,613         0.2         3.6
assistance
Arts, entertainment and
                                   8,867     9,278     9,379         1.1         5.8
recreation
Accommodation and food
                                  22,579   23,467     23,442         -0.1        3.8
services
Other services (except public
                                  21,686   22,206     22,243         0.2         2.6
administration)
1. North American Industry classification Standard.
2. Seasonally adjusted at annual rates.
Source: Statistics Canada, CANSIM II, tables 379-0019 and 379-0022 and Catalogue no.
15-001-XIE.
Last modified: 2003-01-31.




                                                                                 14
                  Canada-US Trade Relationship – Current Situation


APPENDIX #3
Merchandise trade of Canada1


                        Same                                 Change from Change from
                        month      Previous November          previous        same month
                       last year   month        2002           month           last year
                                   $ millions                       % change
Principal trading
partners
Exports                   32,672     35,079      34,299                -2.2                5.0
United States2            27,242     29,710      29,364                -1.2                7.8
Japan                        797         920           811          -11.9                  1.8
United Kingdom               484         380           482          27.1               -0.4
Other European
Economic
Community
countries                  1,479       1,318      1,224                -7.1           -17.2
Other OECD
countries3                 1,039       1,042      1,018                -2.4            -2.0
Other countries            1,632       1,709      1,400             -18.1             -14.2
Imports                   28,014     30,222      30,194                -0.1                7.8
United States2            20,407     21,555      21,699                0.7                 6.3
Japan                        939         928           965             4.0                 2.8
United Kingdom               905         857           767          -10.5             -15.3
Other European
Economic
Community
countries                  1,948       2,134      2,147                0.6            10.2




                                                                                           15
                   Canada-US Trade Relationship – Current Situation


Other OECD
countries3                 1,515      1,756      1,641          -6.5     8.4
Other countries            2,299      2,994      2,975          -0.6    29.4
Balance                    4,658      4,856      4,106            ...      ...
United States2             6,835      8,155      7,665            ...      ...
Japan                       -142         -8       -154            ...      ...
United Kingdom              -421       -477       -285            ...      ...
Other European
Economic
Community
countries                   -470       -816       -923            ...      ...
Other OECD
countries3                  -476       -713       -624            ...      ...
Other countries             -667     -1,285     -1,575            ...      ...

Principal
commodity
grouping4
Exports
Agricultural and
fishing products           2,557      2,438      2,301          -5.6    -10.0
Energy products            3,361      4,968      4,642          -6.6    38.1
Forestry products          3,150      3,095      3,091          -0.2     -1.9
Industrial goods and
materials                  5,083      5,373      4,989          -7.1     -1.9
Machinery and
equipment                  7,181      7,073      6,940          -1.9     -3.3
Automotive products        7,526      7,858      7,652          -2.6     1.7
Other consumer             1,078      1,222      1,212          -0.9    12.4



                                                                          16
                   Canada-US Trade Relationship – Current Situation


goods
Special transactions
trade5                       2,027       2,132      1,972            -7.5            -2.7
Imports
Agricultural and
fishing products             1,774       1,829      1,832            0.2             3.3
Energy products              1,087       1,884      1,239          -34.2            14.0
Forestry products              235         275          268          -2.5           14.0
Industrial goods and
materials                    5,351       5,677      5,638            -0.7            5.4
Machinery and
equipment                    8,597       8,769      9,098            3.8             5.8
Automotive products          6,163       6,924      6,593            -4.8            7.0
Other consumer
goods                        3,609       4,011      4,001            -0.3           10.8
Special transactions
trade5                         531         509          535          5.1             0.7
... Figures not appropriate or not applicable.
1. Seasonally adjusted data.
2. Also includes Puerto Rico and Virgin Islands.
3. Organization for Economic Co-operation and Development countries other than the
United States, United Kingdom, Japan and the European Economic Community.
4. Figures not adjusted to balance-of-payments basis.
5. Mainly low-valued transactions, value of repairs to equipment and goods returned to
country of origin.
Source: Statistics Canada, CANSIM II, tables 228-0001, 228-0002 and 228-0003 and
Catalogue no. 65-001-XIB.
Last modified: 2003-01-17.



                                                                                         17
                     Canada-US Trade Relationship – Current Situation


    APPENDIX #4


     Table 1: Distribution of Canadian Trade with United States Regions, 1988 and 2001
                                               Exports (% share)          Imports (% share)
                                          1988         2001        1988         2001
    Source: Statistics Canada

    Northeast                             30.8         23.2        21.9         18.5
    Midwest                               45.6         41.0        47.7         43.1

    South                                 12.6         16.8        17.2         25.4
    West                                  10.7         17.2        10.7         11.2

    Other U.S. territories                0.3          1.8         2.5          1.8
    Total                                 100.0        100.0       100.0        100.0




     Table 2: Canada's Top Three Import and Export Commodities in United States Trade
Source: Statistics Canada

Canadian Exports to the United States as per cent share, 2001
Rank        Commodity                                Northeast     Midwest     South West
1           Motor vehicles                           6.6           73.7        4.6      15.1
2           Mineral fuels                            25.8          37.6        10.0     26.6
3           Machinery                                18.6          39.4        26.0     16.0
Canadian Imports from the United States as per cent share, 2001
Rank        Commodity                                Northeast     Midwest     South West
1           Motor vehicles                           5.3           73.1        18.7     2.9
2           Machinery                                15.4          50.3        23.2     10.8
3           Electrical Machinery/Electronics         23.4          25.3        33.8     16.9




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                 Canada-US Trade Relationship – Current Situation


APPENDIX #5

November 2002-Canadian Exports-Imports to the United States-Millions of dollars

                   Same                             Change from         Change from
                 month last Previous November        previous          same month last
                   year       month       2002        month                 year
                             $ millions                         % change

Principal
trading
partners
Exports
United States2      27,242      29,710     29,364             -1.2                 7.8
Imports
United States2      20,407      21,555     21,699               0.7                6.3
Balance                                                          ...                  ...
United States2       6,835        8,155     7,665                ...                  ...




                                                                                    19
              Canada-US Trade Relationship – Current Situation


APPENDIX #6




                                                                 20
                Canada-US Trade Relationship – Current Situation


BIBLIOGRAPHY
Websites:
U.S. Department of State, Profile on Canada
       http://www.state.gov/r/pa/ei/bgn/2089.htm
Canada – Department of Foreign Affairs and International Trade. Topic: Softwood
Lumber
       http://www.dfait-maeci.gc.ca/eicb/softwood/menu-en.asp
Canada’s International Market Access Priorities 2002. Opening Doors to the World
       http://www.dfait-maeci.gc.ca/tna-nac/2002/4-en.asp

Walker, William. Even Before the 'Moron' Flap, Canada was Petty in U.S. Eyes by
Toronto Star November 29, 2002
U.S. Commercial Service - Canada
       http://www.buyusa.gov/canada/en/page33.html




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