Trade
The United States and Canada share the world's largest and most comprehensive trading relationship, which supports millions of jobs in each country. The two countries share a $1 trillion annual bilateral trade and investment relationship with a highly integrated supply chain, and the two-way trade of goods and services totaled approximately $500 billion in 2009. Canada is the leading export market for 36 of the 50 U.S. states; the country receives 19% of total U.S. exports, and trade with Canada supports 8 million U.S. jobs. Further, growth in the U.S. economy translates into growth in Canada, with 22 percent of Canada's GDP coming from goods exports to the United States.
The United States-Canada Free Trade Agreement (FTA), which went into effect in 1989, was superseded by the North American Free Trade Agreement among the United States, Canada, and Mexico (NAFTA) in 1994. NAFTA, which embraces more than 450 million people of the three North American countries, expanded upon FTA commitments to move toward reducing trade barriers and establishing agreed upon trade rules. It has also resolved long-standing bilateral irritants and liberalized rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the United States and Canada has grown by more than 265%.
U.S. immigration and customs inspectors provide preclearance services at eight airports in Canada, allowing air travelers direct connections in the United States. In 2009, Canadian tourists made 38.9 million trips to the United States and spent more than $20 billion, more than any other nationality.
Canada is the single largest foreign supplier of energy to the United States, providing approximately 20% of U.S. oil imports and approximately 18% of U.S. natural gas imports. Recognition of the commercial viability of Canada's oil sands in Alberta has raised Canada's proven petroleum reserves to 170 billion barrels, making it the world's second-largest holder of reserves after Saudi Arabia. Canada and the United States operate an integrated electricity grid which meets jointly developed reliability standards and provide all of each other's electricity imports. Canada is a major supplier of electricity (mostly clean and renewable hydroelectric power) to New England, New York, the Upper Midwest, the Pacific Northwest, and California. Canadian uranium helps fuel U.S. nuclear power plants.
Bilateral trade disputes are managed through bilateral consultative forums or referral to World Trade Organization (WTO) or NAFTA dispute resolution procedures. For example, in response to WTO challenges by the United States, the two governments negotiated an agreement on magazines providing increased access for the U.S. publishing industry to the Canadian market, and Canada amended its patent laws to extend patent protection to 20 years. Canada has challenged U.S. trade remedy law in NAFTA and WTO dispute settlement mechanisms. The two countries negotiated the application to Canadian goods of “Buy America” provisions for state and local procurement under the American Recovery and Reinvestment Act. The United States has encouraged Canada to strengthen its intellectual property laws and enforcement. The United States and Canada also have resolved several major issues involving fisheries. By common agreement, the two countries submitted a Gulf of Maine boundary dispute to the International Court of Justice in 1981; both accepted the Court's October 12, 1984 ruling that delineated much of the boundary between the two countries' Exclusive Economic Zones.
The United States and Canada signed a Pacific Salmon Agreement in June 1999 that settled differences over implementation of the 1985 Pacific Salmon Treaty. In 2001, the two countries reached agreement on Yukon River salmon, implementing a new abundance-based resource management regime and effectively realizing coordinated management over all West Coast salmon fisheries. The United States and Canada reached agreement on sharing another trans-boundary marine resource, Pacific hake. The two countries also have a treaty on the joint management of albacore tuna in the Pacific, and closely cooperate on a range of bilateral fisheries issues and international high seas governance initiatives.
Canada and the United States have one of the world's largest investment relationships, and the U.S. is Canada's largest foreign investor: total investment in 2009 was $280 billion -- over half of total foreign direct investment, according to Statistics Canada -- supporting over 1 million Canadian jobs. U.S. investment is primarily in Canada's mining and smelting industries, petroleum, chemicals, the manufacture of machinery and transportation equipment, and finance.
Canada is the fifth-largest foreign investor in the United States, with direct investment totalling $226 billion in 2009 and supporting over half a million jobs, primarily in the manufacturing, finance and banking sectors.
