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U.S. – Canada Trade: Opportunities Through NAFTA and Beyond

U.S. – Canada Trade: Opportunities Through NAFTA and Beyond. Andrew I. Rudman Office of NAFTA & Inter-American Affairs International Trade Administration U.S. DEPARTMENT OF COMMERCE Northern Networks Trade Conference Duluth, MN October 18, 2006. TOP 10 U.S. TRADING PARTNERS 2005.

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U.S. – Canada Trade: Opportunities Through NAFTA and Beyond

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  1. U.S. – Canada Trade: Opportunities Through NAFTA and Beyond Andrew I. RudmanOffice of NAFTA & Inter-American AffairsInternational Trade AdministrationU.S. DEPARTMENT OF COMMERCENorthern Networks Trade Conference Duluth, MNOctober 18, 2006

  2. TOP 10 U.S. TRADING PARTNERS 2005 Source: U.S. Bureau of Census

  3. U.S. EXPORTS TO NORTH AMERICAEXCEEDING THOSE TO OTHER REGIONS 2005 NAFTA 36.7% Source: U.S. Bureau of Census

  4. U.S. TRADE IN PERSPECTIVE 2005 Source: U.S. Bureau of Census

  5. U.S. – NAFTA TOTAL TRADE 1990-2005 Source: U.S. Census Bureau

  6. NAFTA TRADE IN PERSPECTIVE • Most comprehensive Regional Trade Agreement signed by the United States • Exports to NAFTA are outpacing rest of world • NAFTA trade has increased by over $496 billion since 1993 to $789.5 billion in 2005 • Combined trade is $2.2 billion a day between NAFTA partners, that’s $1.5 million a minute • U.S. two-way merchandise trade with Canada and Mexico more than exceeds U.S. two-way merchandise trade with the European Union (25) and Japan combined • U.S. exports to Mexico are greater than U.S. exports to Mercosur and the Andean region combined.

  7. U.S. – CANADA TRADE Source: U.S. Bureau of Census

  8. CANADA & TRADE SHARE OF CANADIAN IMPORTS 2005 SHARE OF CANADIAN EXPORTS 2005 Source: World Trade Atlas

  9. CANADA & ENERGY • In 2005, Canada had a reported 178.8 billion barrels of proven oil reserves, second only to Saudi Arabia. • However, the bulk of these reserves (over 95%) are oil sands deposits in Alberta. • Nevertheless, during January-November 2005, the top supplier in the world of crude oil to the United States was Canada (1.6 million bbl/d). • More than 80 percent of U.S. natural gas imports come from Canada, mainly from the western provinces of Alberta, British Columbia, and Saskatchewan. • Canada enjoys a vigorous electricity trade with the U.S., and the electricity networks of the two countries are heavily integrated. Source: U.S. Department of Energy

  10. NAFTA SUCCESSES • LEVELED THE PLAYING FIELD • CANADA: Duty-free in 1998 • MEXICO: Virtually duty-free; average Mexican tariff has fallen from 10% to 2% • all tariffs to be eliminated by 2008 • STIMULATED TRADE GROWTH • U.S. exports to NAFTA partners have grown by 133% • For Canada up 110% • for Mexico up 188%

  11. MINNESOTA & TRADE

  12. MINNESOTA & TRADE • NAFTA: Exports from Minnesota to Canada & Mexico reached $4.1 billion in 2005, an increase of 101% since 1993 when exports were $2.1 billion. • NAFTA: Over 28% of Minnesota’s exports go to the NAFTA region. • CANADA: Canada is Minnesota’s #1 export market 24.4 percent of its exports go to Canada. In 2005 it exported $3.6 billion. • CAFTA-DR: Exports from Minnesota reached $81.4 million in 2005. • U.S. Peru TPA: Exports from Minnesota reached $19.8 million in 2005. • U.S.-Colombia TPA: Exports from Minnesota reached $38.9 million.

  13. SHARE OF MINNESOTA’S MERCHANDISE EXPORTS , 2005 28 PERCENT WENT TO NAFTA Source: U.S. Bureau of Census

  14. The SPP- What Is It? • The Goal: ensure North America- • Best and safest place to live, work and do business • Maintains NORTH AMERICAN ADVANTAGE in era of global sourcing • Builds on the NAFTA, P4P, and border initiatives to: • Better protect citizens from man-made and natural threats • Promote safe and efficient movement of people and goods • The SPP consists of an economic and a security component • Based on the principle that our common prosperity depends on our mutual security • Expands economic opportunities by reducing barriers and making our businesses more competitive in the global marketplace

  15. The SPP- What Is It? • The SPP is meant to: • Cut red tape, lower costs for manufacturers by eliminating unnecessary barriers • Enhance our mutual efforts to: • improve our quality of life, • protect our environment, • improve food safety and consumer choice, • combat infectious diseases, and • develop responses to cross-border man-made/natural disasters

  16. Economic (‘Prosperity’) Component Working Groups • Manufactured Goods (DOC) • Lower production costs for North American manufacturers by eliminating unnecessary regulatory barriers, ensuring compatibility of regulations and by eliminating redundant testing requirements • Provide consumers with cheaper, safer, and more diversified and innovative products • The Other Nine: • E-Commerce and ICT (DOC) • Energy (DOE) • Movement of Goods (USTR) • Transportation (DOT) • Food and Agriculture (USDA) • Business Facilitation (DOS) • Financial Services (Treas.) • Environment (DOS) • Health (HHS)

  17. Security Component Working Groups(DHS) • Secure North America from External Threats • Traveler and Cargo Security, and Bio-protection • Prevent and Respond to Threats within North America • Aviation and maritime security, law enforcement, intelligence cooperation, and protection, prevention and response • Further Streamline the Secure Movement of Low-Risk Traffic across our Shared Borders • Develop and implement strategies to combat threats, such as terrorism, organized crime, migrant smuggling and trafficking

  18. Some Accomplishments to Date • Uniform in-advance electronic exchange of cargo manifest data (maritime, railroad and motor carriers) • 50% Reduction of Detroit/Windsor waits • Consumer Product Safety Agreements • Food Safety Coordinating Task Force • Harmonizing risk assessment mechanisms, and establishing protocols to detect fraud and smuggling • Ongoing R.O.O. liberalization- $30 bln in goods affected • NASTC Strategy (steel) • US-Canada PulseNet MOU • Creation of avian/pandemic influenza coordinating body • Mexico adoption of low-sulfur fuel standard

  19. 2006 Initiatives • Five SPP ‘Cancun’ priorities: • Smart, secure borders • Energy security • Emergency management • Avian and Pandemic Influenza • North American Competitiveness Council

  20. North American Competitiveness Council(NACC) • Membership- 10 private sector representatives from each country • U.S. Secretariat- Council of the Americas and U.S. Chamber of Commerce • Organization varies in each country • Purpose: provide recommendations on N. American competitiveness that could be addressed through the SPP • Value of high-level private sector input • Recommendations AND solutions to SPP Ministers

  21. Next Steps • NACC priorities to Ministers • SPP Ministers Meeting early 2007 • Working groups to continue existing projects and identify new deliverables

  22. Highly developed transportation infrastructure Sophisticated telecommunications infrastructure integrated with the U.S. Stable, mature financial markets No restrictions on the movement of funds into or out of the country Efficient Marketing Channels Why Canada First? • Common language • Culture • Canadians are very familiar with U.S. products and services • Geographic proximity • Congruent time zone • High standard of living • Supportive Government • Roaring Canadian Dollar • US$ 1.00 = C$ 1.1357

  23. Understanding Canada Your key to making a loonie or a toonie north of the border • Realize the significance of the U.S.-Canada trading relationship • In 2005, two-way trade amounted to US $479 billion - up 12% from 2004 and is larger than the sum of 15 European Union countries • Look at regional differences in Canada • Canada and the U.S. are similar in many ways, but understanding what makes Canada different and unique is important for U.S. exporters • Look to the U.S. Commercial Service for assistance in understanding the Canadian market and selling your products or services in Canada

  24. 80% of Canada’s Population

  25. Culture Metric system Labeling Taxes Understanding the Differences A relatively small and dispersed Canadian population

  26. Sector Automotive Parts & Services (APS) Electronic Power Systems (EPS) Building Products (BLD) Plastic Materials/Resins (PMR) Oil/Gas Field Machinery (OGM) Computers/Peripherals (CPT) Computer Software (CSF) Telecommunications Equipment (TEL) Medical Equipment (MED) Agricultural Machinery and Equipment (AGM) Water Resources Equipment/Services (WRE) Security/Safety Equipment (SEC) Sporting Goods/ Recreational Equipment (SPT) Best Prospects for U.S. Exports to Canada (2006)

  27. Canadian Market Entry Strategies • APPOINT AGENT • APPOINT DISTRIBUTOR • FORM STRATEGIC ALLIANCES • ESTABLISH BRANCH OFFICE IN CANADA

  28. ITA Can Help

  29. Commercial Service Canada Products and Services • Gold Key Service • Market Research • International Partner Search • Single Company Promotion (SCP) • Platinum Key Service • Trade Missions, DealMakers • Business Service Provider (BSP)

  30. Upcoming Trade Schedule • Trade Events scheduled from 2006 – 2008 include: • Industrial/Maritime Security Event • Canadian Solid Waste & Recycling Expo • Meet the Buyers Seminar • Plastics Executive Service Trade Mission • Smart Building Seminar • For a complete listing of all trade events occurring from 2006 – 2008, please refer to our website. • http://www.buyusa.gov/canada/en

  31. Why Monitor and Enforce Trade Agreements? • Trade Agreements increase market access for U.S. exporters. • Important to all stakeholders that existing trade agreements are being enforced. • Create confidence and support for future trade opening agreements.

  32. What Kinds of Barriers do Firms Face? • Tariff and Customs Barriers • Rules of Origin, Certificates of Origin • Import Licensing • Standards, Testing, Labeling, or Certification • Lack of Intellectual Property Rights Protection • Government Procurement Contracts

  33. ITA COMPLIANCE ACTIONWhat we do? • Identify unfair treatment • Form Compliance Team • COUNTRY, INDUSTRY, AND AGREEMENT SPECIALISTS, GENERAL COUNSEL, FOREIGN POST, OTHER – NIST, PTO • Apply FTA/WTO Analysis • Craft Action Plan to Resolve Issue

  34. USEFUL LINKS • COMMERCE NAFTA SITE – www.mac.doc.gov/nafta/index.htm • SECURITY & PROSPERITY PARTNERSHIP – www.spp.gov • US & FCS (Minnesota) - www.buyusa.gov/minnesota/ • US & FCS (Canada) – www.buyusa.gov/canada/en • TRADE STATISTICS BY STATE – tse.export.gov • TRADE INFORMATION CENTER – www.trade.gov/td/tic/ • NORTH AMERICAN DEVELOPMENT BANK - www.nadbank.org • NORTH AMERICAN COMMISSION FOR ENVIRONMENTAL COOPERATION – www.cec.org • UNITED STATES TRADE REPRESENTATIVE –www.ustr.gov • EXPORT INFORMATION – www.export.gov • MARKET ACCESS OR COMPLIANCE PROBLEMS – www.tcc.mac.doc.gov

  35. Contact Information • Phone: 202-482-6452 • Fax: 202-482-5865 • Andrew_Rudman@ita.doc.gov • NAFTA Website: • www.mac.doc.gov/nafta/compliance

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