Trade and Agriculture between the United States and Canada
The North American Free Trade Agreement (NAFTA) facilitates economic interaction amongst three of the world’s largest economies, which together account for more than 20% of the global economic activity. The trilateral negotiations that created NAFTA started as early as 1990; however, the commercial agreement between Mexico, Canada, and the United States came into full force in 1994. Since its creation, NAFTA has been revised or amended on several occasions, including the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation. Today, the three national economies that participate in NAFTA are profoundly integrated and all three nations figure amongst each other’s most important trading partners. This article explores the economic ties that exist between Canada and the US.
Trade and Agriculture between the United States and Canada
Even though Canada is larger in territorial size than the US, the Canadian economy as well as its population are much smaller. In fact, the Canadian economy is comparable to that of a large state or region within the US, particularly given the fact that more than half of the Canadian economy is tied to that of the US. Moreover, the first free trade agreement between Canada and the US was signed in 1988. Eventually, with the creation of NAFTA and its provisions, almost all agricultural and other trade between Canada and the US became exempt from duties and tariffs. The unique economic relationship between the US and Canada represent the world’s largest and most important bilateral trading relationship amongst sovereign nations.
Furthermore, the long-standing political and economic relationship between the two neighboring countries has standardized most of the formalities and legal procedures between them. For example, all trade requires the NAFTA Certificate of Origin or Form 434 of the US Bureau of Customs and Border Protection, which is the same form used by Canada’s Border Service Agency. Similarly, in the case of agricultural products, the US Food Safety and Inspection Service as well as the Food and Drug Administration work together with the Canadian Food Inspection Agency on regulatory paperwork, such as the Certificate for Export of Meat and Poultry Products (Form 9135-3) and the Animal Health Export Certificate (VS Form 17-140).
Canada’s most important agricultural products include wheat, barley, oilseed, tobacco, fruits, vegetables, dairy products, fish, and wood products. Meanwhile, the most important products of the agriculture industry in the US also include wheat, corn, grains, fruits, vegetables, cotton, beef, pork, poultry, dairy products, fish, and wood products. During 2015, Canada was the top destination for US agricultural exports, totaling US$21 billion. Likewise, most of those US agricultural exports, US$16.5 billion of them, were high value products. Unsurprisingly, the other main markets for US agricultural exports are Mexico and China.
As the US seeks to revise and renegotiate its trade policies and agreements, the government authorities should consider the strong economic ties between the US and Canada, which are mutually beneficial.