Canada and the United States: Trade, Investment, Integration and the Future (PRB E)
Over the past decade, Canada's economic ties to the United States have .. to describe Canada-U.S. trade relations (and the rest of the relationship) is “tranquil. The trade relationship of the United States with Canada was the second largest in the world after China and the United States. In , the goods and services. The United States and Canada conduct the world's largest bilateral trade relationship, with total merchandise trade (exports and imports).
There was some hope that settlers in western Canada—most of them recent immigrants from the U.
Canada–United States trade relations
However, the American invasions were defeated primarily by British regulars with support from Native Americans and Upper Canada Ontario militia.
Aided by the powerful Royal Navy, a series of British raids on the American coast were highly successful, culminating with an attack on Washington that resulted in the British burning of the White HouseCapitoland other public buildings. At the end of the war, Britain's American Indian allies had largely been defeated, and the Americans controlled a strip of Western Ontario centered on Fort Malden. However, Britain held much of Maine, and, with the support of their remaining American Indian allies, huge areas of the Old Northwest, including Wisconsin and much of Michigan and Illinois.
With the surrender of Napoleon inBritain ended naval policies that angered Americans; with the defeat of the Indian tribes the threat to American expansion was ended. The upshot was both sides had asserted their honour, Canada was not annexed, and London and Washington had nothing more to fight over. The war was ended by the Treaty of Ghentwhich took effect in February Canada reduced American immigration for fear of undue American influence, and built up the Anglican church as a counterweight to the largely American Methodist and Baptist churches.
The myth that the Canadian militia had defeated the invasion almost single-handed, known logically as the "militia myth", became highly prevalent after the war, having been propounded by John StrachanAnglican Bishop of York. A small interlocking elite, known as the Family Compact took full political control. Democracy, as practiced in the US, was ridiculed.
The policies had the desired effect of deterring immigration from United States. Revolts in favor of democracy in Ontario and Quebec "Lower Canada" in were suppressed; many of the leaders fled to the US. Alabama claims[ edit ] An editorial cartoon on Canada—United States relations, I have told him that we can never be united. One result was toleration of Fenian efforts to use the U. More serious was the demand for a huge payment to cover the damages caused, on the notion that British involvement had lengthened the war.
Seward negotiated the Alaska Purchase with Russia inhe intended it as the first step in a comprehensive plan to gain control of the entire northwest Pacific Coast. Seward was a firm believer in Manifest Destinyprimarily for its commercial advantages to the U. Seward expected British Columbia to seek annexation to the U. Soon other elements endorsed annexation, Their plan was to annex British ColumbiaRed River Colony Manitobaand Nova Scotiain exchange for the dropping the damage claims.
The idea reached a peak in the spring and summer ofwith American expansionists, Canadian separatists, and British anti-imperialists seemingly combining forces. The plan was dropped for multiple reasons.
London continued to stall, American commercial and financial groups pressed Washington for a quick settlement of the dispute on a cash basis, growing Canadian nationalist sentiment in British Columbia called for staying inside the British Empire, Congress became preoccupied with Reconstruction, and most Americans showed little interest in territorial expansion. The " Alabama Claims " dispute went to international arbitration. Britain paid and the episode ended in peaceful relations.
Prior to Confederation, there was an Oregon boundary dispute in which the Americans claimed the 54th degree latitude. That issue was resolved by splitting the disputed territory; the northern half became British Columbia, and the southern half the states of Washington and Oregon. Strained relations with America continued, however, due to a series of small-scale armed incursions named the Fenian raids by Irish-American Civil War veterans across the border from to in an attempt to trade Canada for Irish independence.
The British government, in charge of diplomatic relations, protested cautiously, as Anglo-American relations were tense. Much of the tension was relieved as the Fenians faded away and in by the settlement of the Alabama Claimswhen Britain paid the U. Disputes over ocean boundaries on Georges Bank and over fishing, whaling, and sealing rights in the Pacific were settled by international arbitration, setting an important precedent.
French American Afterthe pace of industrialization and urbanization was much faster in the United States, drawing a wide range of immigrants from the North. It was common for people to move back and forth across the border, such as seasonal lumberjacks, entrepreneurs looking for larger markets, and families looking for jobs in the textile mills that paid much higher wages than in Canada.
By then, the American frontier was closing, and thousands of farmers looking for fresh land moved from the United States north into the Prairie Provinces. The net result of the flows were that in there wereAmerican-born residents in Canada 3. The issue was unimportant until a gold rush brought tens of thousands of men to Canada's Yukon, and they had to arrive through American ports.
Canada–United States relations - Wikipedia
Shared Infrastructure Joint infrastructure has also furthered economic relations. Infor example, the St. Inthe two countries signed the Columbia River Treatylaunching a major project to build and operate four dams for electric power and flood control, with three of the dams in British Columbia and one in the state of Montana.
As the Canadian and US economies integrated in the second half of the 20th century, the two countries were closely linked through oil and gas pipelines, railways, highways, electricity grids and telecommunications networks.
Shared Concerns Deepening economic ties over roughly years reflect the ongoing evolution of the Canadian and US economies, from rural to industrial and now to knowledge-based economies. Globalization and technological change, shifts in demand for natural resources, as well as new concerns — for example, environmental challenges such as climate changeand geopolitical challenges such as terrorism and border security — have all shaped the ongoing relationship.
It was not until the start of the s that trade with the US exceeded trade with Great Britain. Before the First World War, Canada—US trade was relatively small and concentrated, on the Canadian side, in agricultural productsfisheries and raw materials such as lumberwhile imports from the US included manufactured products.
Although officially neutral, Britain had supported the Confederate states in the American Civil War — a key factor in US abrogation of the treaty. This was an unexpected blow and over the next 40 years Canada made repeated efforts to persuade the US to enter into a new reciprocal trade agreement, starting with Prime Minister John A.
- Canada–United States relations
- Canada–US Economic Relations
- Canada-U.S. Free Trade Agreement
Canada soon found itself battling a prolonged recessionwith many Canadians moving to the US and some suggesting the country would be better off joining the US. Improved access to the American market was seen as essential. The government of Prime Minister Alexander Mackenzie in drafted a proposed reciprocity treaty that matched the agreement, but also added a long list of manufactured goods, including agricultural equipment, steel, locomotives, furniture, paper and boots and shoes.
National Policy In office again after the federal election, Macdonald began implementing his proposed National Policy of high tariffs on manufactured imports but lower tariffs on raw materials and intermediate productsas well as a coast-to-coast rail system and rapid settlement of the West. If Canada was to be denied the access it desired to the US market, it would create new opportunities within Canada for economic development through east—west nation-building.
Prime Minister John A. Macdonald's National Policy protected Canadian manufacturers with high tariffs on American imports, however it fueled the creation of a branch plant economy. Major US corporations first began establishing bases in Canada late in the 19th century, increasing US investment. It was estimated that US corporations owned branch plants in Canada byand that more were added over the next 12 years. Twenty per cent of the book value of Canadian industry was US-owned by The Macdonald government felt it had little choice but to pursue a higher-tariff policy, facing a US policy of even higher tariffs.
Yet the National Policy legislation also included a standing offer of a reciprocity agreement with the US. Little progress was made untilwhen the American president, William Howard Taft, decided the time had come to develop a new bilateral relationship.
The government of Prime Minister Wilfrid Laurier reported to the House of Commons in that a free trade agreement had been reached. By this time, Canada had a population of 7. However, the Laurier government, despite a parliamentary majority, decided to first hold a free trade election.
The Conservatives under Robert Borden defeated the Liberals and the free trade agreement with the US was not implemented. Fears of annexation by the US and concern over the loss of the British connection, along with strong business opposition, doomed the agreement.
Canada had spent nearly 45 years seeking a reciprocal trade agreement, but when the Americans finally agreed, Canada changed its mind. The US initiative was designed to improve competition in the US market. It included a general reduction in tariff rates and the addition of many items to the free list, and it was highly favourable to Canadian exporters.
Zero or near-zero tariffs were introduced for steel rails, timber, iron ore, agricultural equipment and a range of farm products. But this promising period in Canada—US economic relations came to an abrupt end. Faced with an agricultural crisis, as farm prices collapsed, the US passed the Emergency Tariff Act ofwhich sharply raised tariffs on agricultural imports.
This was followed, inby the Fordney-McCumber Tariff, which completely reversed the trade liberalization in the Underwood Tariff initiative and dealt a harsh blow to Canada. Not surprisingly, Canada and other countries retaliated with higher tariffs of their own.
However, in andCanada invited the US to negotiate a reciprocal trade agreement. There was no US response. Canadian exporters did benefit from US prohibition, which ran from January to Decemberthough smuggling profits did not show up in official statistics. Great Depression Worse was to come with the Great Depression. Inthe US enacted the Tariff Act of — the Smoot-Hawley Tariff — which took US tariffs to record levels, not only dealing an immediate and devastating blow to the Canadian economy but precipitating competitive rounds of protectionism worldwide, making the Great Depression much worse.
Canada responded quickly, raising tariffs twice, in its and budgets. The Great Depression led to more trade protectionism and even higher tariffs in both Canada and the US. Bennett tried to ease tariffs and gain more access to US and world markets during the Depression. This offset some of the damage from the harsh US measures but was not a long-term solution for Canadian economic growth and prosperity.
By earlyPrime Minister R. Bennett met with Roosevelt in April, with the two leaders agreeing to increase trade. A Canada—US agreement in was a modest step, but marked the beginning of an economic relationship that over time led to steadily declining tariffs and other trade barriers. A second reduction in tariffs came with a subsequent agreement under the Reciprocal Tariff Act.
These agreements made it easier to export commodities such as fish, lumber, cattle, dairy products and potatoes, as well as machinery and equipment to the US, while Canada reduced some of its barriers to imports. These were the first successfully concluded trade agreements between the two countries since the reciprocity agreement, a gap of roughly 80 years.
Canada needed access to US industrial supplies and dollars to undertake its war effort. All Canadians were required to sell their holdings of foreign exchange to the Foreign Exchange Control Board and Canadians were not permitted to buy foreign exchange for pleasure travel. Until the Second World War, Canada had regularly run trade deficits with the US but had offset these through its surpluses with Britain.
At the same time, to meet its industrial war and other needs, Canada found itself with a serious shortage of US dollars. Under the resulting Hyde Park agreement, Canada and the US agreed to co-ordinate production of war materials to reduce duplication and to enable each country to specialize.
Mackenzie King second from left and Franklin D. Roosevelt second from right courtesy NGC. The postwar economic recovery had led to a surge in imports as Canada experienced a sharp rise in domestic demand, along with conversion of its industrial base to peacetime production.
InCanada again introduced exchange controls to limit the purchase by Canadians of US dollars to essential purposes. The oil discoveries at LeducAlberta, and other discoveries in western Canada, meant that the US now had access to more secure oil supplies shipped overland rather than in ocean-going vessels. The US gave Canadian oil preferential treatment in what at the time was a highly protected market.
This also marked the beginning of a network of North American oil and gas pipelines. The economic crisis in the mids and the growing interdependence in trade and resource development led to new discussions between Canada and the US for a free trade agreement.
But Prime Minister Mackenzie King in halted discussions out of fear of rejection by Canadians concerned about the threat of assimilation into the US. Canada relied instead on successive rounds of the General Agreement on Tariffs and Trade now the World Trade Organization to progressively improve access to the US market. These agreements over several decades led to the elimination or significant reduction in most tariffs between Canada and the US.
Defence Industry Collaboration became more important in defence procurement during the Cold War. The two countries agreed to maintain trade in defence products in rough balance. Proposals[ edit ] Since the September 11th attacks, there has been debate on whether there should be further North American integration.
Ambassador Paul Cellucci stated, however, "Security trumps trade" in the United States, and so as long as Canada is a possible point of entry for terrorists, such integration seems unfeasible. Please help improve this article by adding citations to reliable sources.
Unsourced material may be challenged and removed. March Energy[ edit ] The strength of the Canada—U. Energy trade is the largest component of this cross-border commerce. Canada has the third-largest oil reserves after Saudi Arabia and Venezuelathanks to its oil-sands resources. The United States has historically been Canada's only foreign market for natural gas, oil, and hydropower.
In short, this energy relationship has enhanced U. However, this highly integrated U. Consequently, the United States no longer appears to be an unlimited market for Canadian energy, leaving Canada seeking new export destinations. Both Canada and the United States are increasingly reliant on foreign investment to develop their resource sectors, with Asia serving as an important source of capital.