Teaching About the World’s Largest Trade Relationship

(AKA: 10 Things You Should Know About the Canadian Economy)

Study Canada Summer Institute 2012Dr. Paul A. Storer

Source:http://sbadrinath.files.wordpress.com/2009/03/different26rqcu3.jpg?w=400&h=226

Some Questions of Interest

• Why is Canada so important?

• How does globalization affect an economy?

• What happens when you trade with a much bigger country?

1. Canada is our largest trading partner ….

1. … and we share the world’s largest bilateral trading relationship

WSJ, Dec. 31 2009

Country

% of U.S.

Trade

% of U.S.

Exports

% of U.S.

Imports

Canada 16.2% 19.0% 14.2%

China 13.6% 7.0% 18.1%

Mexico 12.5% 13.3% 11.9%

2011 Trade Share Data

2. Canada is the most important export destination

for 70% of the 50 states

Source: http://www.canadainternational.gc.ca/washington/

Canada’s Rank for States’ Exports of Goods

0

2

4

6

8

10

12

14

16

18

20

Shar

e (%

)

California Oregon Washington

State Export Shares in 2009

Canada

China

Japan Malaysia

Canada

Mexico

Canada

China

Japan

0

5

10

15

20

25

30

35

40

45

50

Shar

e (%

)

Michigan Ohio Pennsylvania

State Export Shares in 2009

China China China

Canada

Canada C

anada

Mexico

Mexico Mexico

0

5

10

15

20

25

30

35

Shar

e (%

)

Colorado Georgia North Carolina

State Export Shares in 2009

China

China

Netherlands

Mexico

China

Canada

Mexico

Canada

Canada

Source: Kasoff, Drennen, & Storer Chapter

3. Canada is the biggest source of U.S.

petroleum imports

U.S. Petroleum Imports (2009)(Source: U.S. Energy Info. Agency)

• Source: “The World’s Largest Trading Relationship”,• Embassy of Canada.

• Source: http://www.pse.com/energyEnvironment/EnergySupply_NaturalGasProfile.aspx

Source:Economist.com

Oil Sands

Reserves• Source:• www.ubc.ca

• Source: www.guardian.com

Source: www.latimes.com

http://nationalpostcomment.files.wordpress.com/2011/11/keystone-pipeline.jpg?w=620

B.C. Carbon Tax Program

4. Canada’s economic base has evolved over time and economic policy is more

“hands off” than in the 1970s or 1980s

GDP Shares, April 2012

The Modern Canadian Economy: Technology

Transportation

http://www.airlinereporter.com/wp-content/uploads/2012/05/ascrj700.jpg

Adaptation: High-end Clothing

1970s: Government Ownership of Petro-Can

5. Canada-U.S. trade is often about trading

“apples for apples” and “making things together”

Making Things Together:Specialization, Scale and“Apples for Apples” Trade

Ford Edge:Oakville, Ontario. Canada cbc.ca

North American Specialization

Ford Escape:Kansas City, MO

SeaTac Airport Shuttle Trains:

• Source: http://www.visitingdc.com/images/seatac-train.jpg

SeaTac Airport Shuttle Trains:Made in PA by a Canadian Company

• Source: http://farm4.static.flickr.com/3379/3198460812_79dd9093c2.jpg

6. The Canadian economy is strong and quite competitive

Source: The Economist

…Canada’s economy has performed well under free trade

Unemployment Rates

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Canada

United States

Unemployment Rates

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Canada

United States

Unemployment Rates

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Canada

United States

Unemployment Rates

2

3

4

5

6

7

8

9

10

11

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Canada

United States

May 2012 - Canada: 7.6%, United States: 8.2%

Total Employment(January 2007 = 100)

94

95

96

97

98

99

100

101

102

103

104

Canada

United States

http://g-mond.parisschoolofeconomics.eu/topincomes/

•Top 1% Share in 2007

• 18.3%

• 13.8%

7. Trade isn’t just goods: Trade in services and foreign

investment

http://www.findfamilyfun.com/birch-bay-washington.htm

• http://www.bloomberg.com/video/91845099/

• The Economist, U.S. Edition, May 23, 2009

Source: http://hockeygonewild.wordpress.com/2010/03/09/

Identify the symbols and logos:

http://www.flickr.com/photos/achimh/4368189976/sizes/l/in/photostream/

8. Canada had a long history of protecting its economy from

U.S. competition

Source:Hart, M.A Trading Nation

The Tariff “Wall”

“Greedy”AmericanWolves

Happy Canadian Farmers AndManufacturers

Sir John A.Macdonald

Source: Hart, M. A Trading Nation

Source: Hart, M. A Trading Nation

• http://news.nationalpost.com• /2012/03/31/tempest-in-a-• yogourt-cup-u-s-based-• chobani-seen-as-threat-to-• local-makers/

9. Canadians and Americans fear the border – but for

different reasons

Trade, Culture, and Sovereignty

• Source: Aislin Cartoon

• Montreal Gazette

Source: Molson“I Am Canadian” ad

Mayflower Pub, Elgin St., Ottawa, July 3, 2012

• http://si.wsj.net/public/resources/images/OB-TN162_HEALTH_G_20120625193406.jpg

• Canada: A Source of “Vulnerabilities?”

Source: Bellingham Herald

• Source: ABC news • Source: International Border Commission

10. Canada-U.S. Trade: What Will the Future Bring?

Whither Canada-U.S. Trade?

U.S. Share of Canada’s Goods Exports

Successes or Failures?

Source: http://www.thestar.com/opinion/editorialopinion/article/1029360--the-cost-of-freer-trade

http://www.dol.wa.gov/images/DLsamples-EDLLg.jpg