Canada / US Shipping Trade Relations
Canadian Customs Information and History of Trade Relations
The United States and Canada enjoy the world’s most lucrative and most enduring trade relationship, with more than $1.8 billion in goods and services, crossing between the two countries each day. Aside from the obvious close proximity of the two countries, several factors account for the strength of this relationship. There are the obvious similarities between the two cultures: We share a language (except in Quebec, where French is the official language), hold similar values, and have a propensity for the same types of consumer goods.
Another important factor in the U.S./Canada trade relationship is the commitment by both countries to minimize tariffs, consolidate regulatory mandates, and facilitate the cross border clearance process. The two countries initially solidified their commitment to expanded trade with the 1989 U.S.-Canada Shipping Free Trade Agreement (FTA). That agreement was expanded upon through the 1994 North American Free Trade Agreement (NAFTA), which eliminated most trade barriers on goods traveling between the United States, Canada and Mexico. In the years since NAFTA has been in effect, cross border trade between the U.S. and Canada has doubled.
Further, the U.S. dollar has historically been very strong against its Canadian counterpart, giving U.S. businesses added buying power in the Canadian market. In 2007, that situation was reversed when the Canadian dollar reached parity, with the U.S. dollar, making the U.S. an attractive shopping destination for Canadian buyers. At the end of September 2010, the two currencies were roughly at parity with each other.
U.S. businesses can look to the north and see a potential market of more than 34 million consumers – about 75 percent of whom live within 90 miles of the border. But as close as that market may seem, there are hurdles that a U.S. business must clear before commencing a trade relationship with Canadian buyers. Regulatory and statutory mandates, border security requirements, transportation challenges, and inventory and distribution issues are some of the issues that must be addressed.
Learn more about the Canadian market, and about how your business can successfully expand to the north:
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The U.S.-Canada Trade Relationship: Economics
The global economic recession took its toll on U.S.-Canadian trade during 2008 and 2009, with overall trade levels down by more than 32 percent. However, the volume of goods crossing the border during 2010 has rebounded sharply, with trade volumes expected to exceed pre-recessionary levels.
U.S. businesses have historically enjoyed a buying advantage in Canada, due to the superior position of the U.S. dollar over its Canadian counterpart. This advantage was negated when, in 2007 the Canadian dollar achieved parity with the U.S. dollar. Since then, the two currencies have traded at-or-near parity. Canadian consumers and businesses have taken advantage of this new level playing field, now looking to the U.S. as a source for competitively-priced goods – a flip flop from the traditional buying hierarchy. In fact, Canada was the largest market for U.S. goods during 2009, and the second largest source of imports.
What are Canadian consumers and businesses buying from the U.S.? Top U.S. exports to Canada during 2009 were: Machinery ($31.4 billion), Vehicles ($31.2 billion), Electrical Machinery ($20.4 billion), Mineral Fuel and Oil ($9.7 billion) and Plastic ($9.1 billion). In addition, the United States sent more than $16 billion in agricultural products to Canada during 2009.
For American consumers and businesses, Canada was a top supplier of Mineral Fuel and Oil ($63.8 billion), Vehicles ($31.6 billion), Machinery ($15.7 billion), Plastic Electrical Machinery ($8.1 billion) and Paper/Paperboard ($7.7 billion).
Source: Office of the U.S. Trade Representative.
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