Canadian International Trade Essay, Research Paper

Canada is great economic superpower that has yet to reach its potential. As the second largest nation by area, we possess vast natural resources. We are a massive importer and exporter on the world stage, who a play a vital role in the stability of the northern hemisphere. Through Canada?s international trade, we export vast quantities of many different foods stuffs, minerals and manufactured goods like cars, while we tend to import lots of Iron, Aluminum and Steel. Our relations with neighbouring nations have been integral in the success of our trade. In 1994 Canada became a member of the North American Free Trade Agreement or NAFTA with the US and Mexico. NAFTA reorganized Canada?s and America?s trading systems to work as one. The trade issue of recent months is about the rising costs of energy in Canada and in the United States. Newly elected President George W. Bush now is proposing a North American energy initiative for a continental power grid. This proposal puts Canada in a very uncomfortable situation. On the one hand we would love to share our resources and appease our super-power to the south. But on the other we prefer to leave our pristine land alone. The growing trend nowadays is that politicians are the ones wanting to please the Americans by giving away our resources, while it is the activist who is concerned about the vast environmental damage this energy legislation could entail.

The composition and structure of Canada?s trade is an ever changing entity. We are one of the chief lumber exporters in the world. We posses vast oil fields in Alberta, where there are about three-hundred billion barrels of oil as opposed to only two-hundred and sixty in Saudi Arabia. Grains are exported by the ton in Saskatchewan and Manitoba, while hundreds of thousands of automobiles are produced in southern-Ontario and Quebec. Recent patterns in Canadian trade are increasing free trade within the continental hemisphere. With 1994’s NAFTA, and this years Summit of the America?s and now George W. Bush?s energy initiates, Canada?s economic brawn is well required.

The growing trend is Canada?s increasing inter-dependance on the economy of the US and the expansion of free trade agreements. NAFTA has brought our economies so close together that when there is a recession or a boom in the US, Canada feels the brunt of it. Also Canada?s long-term economic wealth is more closely tied to the US than before NAFTA. Canada is in a quandary. On the one hand we want to help the Americans with their energy crisis. On the other we don?t want to enter into another trade agreement where Canadian interests will be swept under the rug. In April Canada hosted the Summit of Americas in Quebec City. The leaders of 34 heads of government came to Quebec to extend free trade throughout the America?s. In spite of the protests the politicians tried to hammer out a treaty that would eliminate Tarriffs and trade barriers within the America?s. Newly elected President George W. Bush now is proposing a North American energy initiative that are making some Canadians uneasy. Canada?s Natural Resources Minister Ralph Goodale said that he will be ?aggressive, astute and vigilant? in standing up for Canada in any continental energy initiative. After months of being in office the president gave the specifics of his energy plan which called for 1,300 new power plants and the easing of restrictions on oil and gas development in the wildlife refuge in Alaska. For the short term though, the US wants to buy power from Canada and Mexico. Maud Barlaw, Director of the Council of Canadians says that ?we are selling our energy heritage so that Californians can have two SUV?s, Land Rovers, two car garages and all their gadgets.?

Canada, with our almost insignificant population does play an incredible roll in our global economy. Although we don?t have the capital as the US or the labour force of China or India, we possess the greatest asset of them all…natural resources. And a lot of them. So much so that we have too much. Some might say well, if we have too much then why have natural gas prices in Toronto have quadrupled. This is because of the American demand to the south; Canada may not sell their natural gas to their citizens cheaper than what is being charged south of the border because of NAFTA. So instead of lowering the price of gas the government gives tax rebates to low income households who would have trouble paying for the rising cost of energy. In Alberta, for instance, they are giving more than one billion dollars in natural gas rebates. Now with our abundance of energy, Canada is poised to wrangle with the Americans over what they can or cant have.

Every time Canada enters into another trade agreement with anyone, we lose some degree of independence. The US is the best example though. NAFTA made it very easy for Canada and the US to trade, so easy in fact that figures show that between 1991 and 1995 exports from the US to Canada almost doubled. After NAFTA Canada?s and the US? economies operate as if they were one. That fact can be very beneficial or very detrimental. It can be beneficial when the US economy is booming, then our economy booms. But when the US economy slows down, the Canadian economy slows down too. Unfortunately our economic dependance on the US is only growing. With the Summit of the Americas and now the US energy initiatives, Canada is put in a very precarious position where we have to weigh our desire to be an economically independently wealthy nation or dependant of our economic super-power to the south. Hopefully, we can safely achieve both. In either scenario, we have to be conscientious of our resources. Canada?s vast landscape cannot be molested so that the US can use automobiles for another fifty years. Right now there is cause for concern.

The US president Bush has said that he is going to pull out of the Kyoto protocol to mandatorily reduce greenhouse emissions because he believe this with further inflate the price of energy in the developed world. One cant help but see the conflict of interest because Bush, a former Oilman, and vice-President Dick Cheney a current one, are not objective. They see potential energy reserves in Canada, off the coast of Texas or in the wildlife refuge in Alaska and they want to exploit it and make a few more hundred million dollars. The average U.S. consumer will pay an average of 38-48% more for gasoline, 23% more for electricity and 46% more for natural gas under the UN greenhouse emissions treaty All goods and services requiring energy in manufacturing, transportation or delivery, just about everything, also would become less-affordable lowering living standards of all working families. Jack Kemp, the 1996 U.S. vice presidential candidate, had this to say about the U.N. policy. ?The treaty would saddle Americans with higher energy bills as we are forced to tax energy use. Some have estimated that such a ?carbon tax? could increase the cost of gasoline by as much as 60 cents a gallon, and of home heating oil by 50%. These taxes are highly regressive and will be most harmful to citizens who live on fixed incomes and work at poverty-level wages.? Over the next two decades in the US oil consumption will rise 33%, natural gas consumption will rise 50%, and electricity demands will rise 45%. With that in mind, president Bush is bent on finding more economically viable sources of fuel and Canada seems to be the place.

Canada has become such a friend to the US that we are afraid of upsetting our relationship. Our economies have become so interconnected that there is growing pressure to integrate our economies past NAFTA, towards tax and monetary policies, and even the elimination of the Canadian dollar. Canada has almost been culturally assimilated by the US already, now further integration of our economic policies threaten to make us the 51st state. It is almost impossible for Canada to say no to the US on any range of issues. But on occasion we do. For example, Cuba is a friendly nation to Canada, while a pariah in the eyes of the US. Since our economic policies are similar does not mean that our foreign policy has to be. Another issue with international trade is the problem of foreign ownership of Canadian businesses. ?About 60% of manufacturing in Canada is foreign-owned and many of the larger corporations operating in Canada leave the real innovation, research and development and product development to the US parent.? The growing foreign ownership of Canadian businesses is a cause for concern, because it hinders our ability to be trailblazers in any industry. The important developments would not be in Canada rather in most likely the US. Another phenomena is the propensity of our economic patterns to trade in a north south fashion rather than and east west way. Before NAFTA Canada traded within itself very well. Now that is just the past. Canadians trading with Americans now is second nature.

In conclusion, Canada?s desire to remain an economically independent nation has to be tempered by their desire to be a wealthy nation as well. Becoming a wealthy nation means becoming economically dependant on the US. Foreign ownership is on the rise in Canada, our vast natural resources up for grabs by the energy hungry US and there are less and less restrictions every day for trade within North America. NAFTA has created a good environment for Canada thrive, exports are increasing and we are exporting a safe amount, as not to deplete or decimate any one of our natural resources. Canada is in a good position. We have a small population, great resources and neighbours who have an insatiable need for our goods. Unfortunately this may mean giving up some of our Canadian identity, as if that hasn?t already happened. Yes, our import and exports are mainly to one country, the US, but why not be dependant on the most powerful nation on the planet, ever.