Mutual needs define Canada-US relationship
Canada, not China, is US’s largest trading partner
GARY DOER assumed responsibilities as
Canada’s 23rd ambassador to the United
States in October 2009. Prior to his current
position, he served as premier of Manitoba
for 10 years. During that time he worked extensively with US governors to enhance Canada-US cooperation on trade, agriculture,
water protection, climate change and renewable energy. BusinessWeek magazine in 2005
named Doer one of the top 20 international
leaders on climate change. His government
introduced balanced budgets during each of
his ten years in office while reducing many
taxes, including a plan to eliminate small
business tax. As premier, he led strategic investments in health care, education, training
and infrastructure.
T
he liabilities of trade are easier to
understand than the benefits of
trade,” said Gary Doer at a Robert
Reynolds Distinguished Lecture hosted by
the UC Denver Business School and the
Institute for International Business and
Center for International Business Education and Research (CIBER).
Doer emphasized that trade is about job
creation “but it’s not always easy for people
to recognize this when the evening news
gives more attention to plant closures and
layoffs than plant expansions and hiring.
“It is important for us to continue to
point out the benefits of trade because with
high unemployment in the US and high
unemployment in Canada, it’s easy to talk
about Buy America as a good trade policy
when it’s not. Because Buy America or Buy
Canada equals Close America or Close
Canada which in turn means fewer jobs in
each country.”
The number of US jobs dependent on
trade with Canada: 8 million.
According to the US Census Bureau,
“There has never been a single month,
nor a total year since 1998, when Canada
has not been the largest trading partner of
the United States. (Note: Trade volume
is measured by the sum of exports and
imports.)”
“US-Canada trade went up 22 percent
or close to $50 billion in 2010 from 2009,”
said Doer quoting recent statistics. “The
increase alone shows how important the
trading relationship is between our two
countries.”
In fact, said Doer, “Canada buys more
18
goods from the US than the whole European Union and over 3 times more than
what China buys.” Bottom line: “We are
your biggest customer.”
The US Commercial Service concurs. Its
website talks about the trading relationship
between Canada and the United States as
being “the largest in the world,” and names
Canada as “the No. 1 export market for 34
of the 50 states.”
How Colorado fares
n Jobs, trade. “We’re more than just
hockey players,” said Doer in jest. “There
are 116 Canadian-owned businesses in
Colorado that together employ 10,556
Coloradans throughout the state.” Beyond
these direct jobs, trade with Canada supports an estimated 143,800 indirect jobs in
the state. Encana, Great West Life, Suncor
Energy and Emergency Medical Services
Corp. are a few of the better-known Canadian companies, each with substantial
investments in Colorado and offering employment opportunities that would not
otherwise be available.
• Colorado sells more than 2 percent of
its foreign-bound goods to Canada which
in 2009 amounted to $1.3 billion.
• Canada supplies the state with $1.4 billion in energy, almost all crude petroleum.
n Tourism. “In Colorado tourism is the
No. 2 industry. According to trends, tourism will probably be the largest industry in
North America in 25 years; it will change
and continue to evolve in a very meaningful way,” said Doer. In 2009 Canadians
made more than 126,900 visits to Colorado, contributing $88 million directly to
local economies.
Across the US an estimated 25 million
Canadian tourists visit each year to sightsee and spend money. “For a country of
34 million people, we travel a lot,” said
Doer. “So between our two countries and
between Colorado and Canada we are very
close in terms of our leisure, business and
trade relationships.”
n Security. “For 53 years Canada and
the United States have been working together in the North American Aerospace
Defense Command (NORAD) to provide
perimeter security for both countries and
ensure the safety of our citizens.”
Located in Colorado Springs, NORAD
Canada’s economy...
• As an affluent, high-tech industrial society in the trillion-dollar class, Canada
resembles the US in its market-oriented
economic system, pattern of production
and affluent living standards.
• Canada is the US’s largest foreign supplier of energy, including oil, gas, uranium and electric power.
• Given its great natural resources, skilled
labor force and modern capital plant,
Canada enjoyed solid economic growth
from 1993 through 2007.
• Buffeted by the global economic crisis, the economy dropped into a sharp
recession in the final months of 2008,
and Ottawa posted its first fiscal deficit
in 2009 after 12 years of surplus.
•Canada’s major banks, however,
emerged from the financial crisis of
2008-09 among the strongest in the
world, owing to the financial sector’s tradition of conservative lending practices
and strong capitalization.
• During 2010, Canada’s economy grew
only 3% due to decreased global demand
and a highly valued Canadian dollar.
Source: CIA World Factbook
was established after World War II to protect against threats from what was then
the Soviet Union. NORAD’s mission has
evolved and now includes marine safety as
well.
“The real goal of having this perimeter
security strategy is to make sure that the
$250 billion in bilateral trade keeps moving without interruption,” said Doer.
Breathe easy
Canada and the United States have been
working together to protect the environment and decrease pollutants in the air that
affect people the world over. “When we get
blizzards in Canada we call it a Colorado
low and when people in the US get any
kind of cold weather they call it an Alberta
clipper or Arctic cold,” said Doer. “But
pollution doesn’t know any borders.” He
highlighted several actions that are making
it possible to inhale deeply without putting
one’s lungs at risk.
n Ozone layer. “About 25 years ago
Canada and the United States led the effort
institute for international business - global forum report 2012
to reduce materials in the world that were
presenting a risk to the ozone layer on
earth,” said Doer. That effort resulted in
the Montreal Protocol (see sidebar below)
signed by 193 countries as of Jan. 2009.
n Industrial air pollutants. “Transboundary movement of air pollution from
industrial activities on both sides of the
Canada-US border produces smog and
acid rain which cause serious damage to
the environment and pose a threat to the
air we breathe,” said Doer. In 1991Canada
and the United States signed the Air Quality Agreement aimed at reducing damaging emissions.
The result?
According to Environment Canada, Canadian emissions causing acid rain have
been cut in half since 1990 and emissions
causing smog have been cut by one-third.
In the US sulphur dioxide emissions have
been reduced by 67 percent and power
plant emissions of nitrogen oxides have decreased by more than two-thirds.
“Contrary to naysayers, this agreement
has produced more economic productivity
benefits than anybody had ever contemplated and at a lower cost to industry than
had been predicted.”
n Copenhagen Climate Conference.
Canada agreed to the same target of emissions reductions – 17 percent over 2005
by the year 2020 – that President Obama
negotiated in Copenhagen in 2009, said
Doer. “We have the same eco system, the
same economic trading system, so it makes
sense to have the same target.”
But there are differences that test the
feasibility of this intent. “In Canada 70
percent of our electricity is produced by
renewable energy because we have a lot
of hydroelectric power. In the US over 50
percent of electricity is produced by coal so
there are different challenges.
“Some of the time we’ll be sovereign in
our decision making and some of the time
we’ll work with the US to coordinate our
approach.”
Vehicle standards
On April 1, 2010 the United States and
Canada announced a new set of vehicle
emissions standards, coordinated to be
identical in both countries. Under these
standards the burden is on the manufacturer to design and offer more fuel efficient
vehicles.
However, compliance with the new regulations will increase costs: an estimated
“$52 billion for US manufacturers and
$926 per car for US consumers as manufacturers pass on the emissions tax to car
and truck buyers. These are preliminary
estimates for the United States alone, not
accounting for the additional costs accrued
by compliance in Canada,” according to
the Center for Strategic and International Studies (CSIS) website. The proposed
standards are not yet cast in stone. There
is opposition in the US Congress where
some lawmakers see the new vehicle emissions standards as part of a regulatory power-grab by the Environmental Protection
Agency (EPA).
Energy supplier
Words like “largest” and “most” are often used in connection with Canada’s energy resources. Canada is...
• the United States’ largest and most predictable supplier of hydroelectric power;
• the most significant source for US energy imports, providing the highest foreign
volumes of primary energy and electricity;
• the world’s third largest natural gas
producer and exporter;
• one of the world’s largest producers
and exporters of hydroelectricity;
• the largest supplier of nuclear fuel to
the US.
But it’s Canada’s oil resources that make
it a global contender. Some people may
be surprised to learn that Canada is the
largest supplier of oil to the US. “Canada’s
175.2 billion barrels of proven reserves of
oil place it third globally, behind Saudi
Arabia and Venezuela, and it is the only
non-OPEC member in the top five,” said
Doer. “We have reserves up to the levels
of reserves of oil in many countries in the
Middle East including Saudi Arabia.”
Fields of oil sands are under devel-
ment. Doer acknowledged there has been
criticism about the environmental impact
of oil sands extraction. “In the early stages
of development, emissions were 80 percent
higher than from conventional oil. But
year after year the amount of emissions
has been going down and the oil sands
now have less emissions in terms of climate
change calculations than the thermal oil
from California and Venezuela and some
of the countries in the Middle East.”
Any talk about energy ultimately comes
around to China, in this case China’s strategy to buy or partner with oil companies
in the BRAC countries (Brazil, Russia,
Australia, Canada). Asked about Canada’s
policy regarding this strategy, Doer said:
“Canada monitors these investments because energy sovereignty is very important
to us. We have the power to stop any purchase and so far China has bought only minority shares in different companies. The
only country not affected by that sovereign
power is the US which has a trading relationship on energy with Canada.
“We all have to continue to reduce our
dependency on fossil fuels but we have to
do it in a realistic way. So part of the challenge of our two countries is to continue to
work together on clean energy and a sustainable and predictable source of secure
energy from a secure place: Canada.
“Clean air and clean water should drive
policy: it should be long term; it should
be predictable and the business community should get more engaged to pressure
politicians to enact laws that reflect these
objectives.”
Doer suggested that “business schools
develop models of predictability in terms
of policies that make sense for business and
the public.” w
The Montreal Protocol on Substances that Deplete the Ozone Layer
In 1985 the Vienna Convention for the Protection of the Ozone Layer established
mechanisms for international cooperation in research into the ozone layer and the effects of ozone depleting chemicals (ODCs).
1985 also marked the first discovery of the Antarctic ozone hole.
On the basis of the Vienna Convention, the Montreal Protocol was negotiated and
signed by 24 countries and by the European Economic Community in September
1987. The Protocol called for the Parties to phase down the use of chlorofluorocarbons (CFCs), halons and other man-made ODCs. It is one of the first international
environmental agreements that includes trade sanctions to achieve the stated goals of
a treaty. -www.theozonehole.com/montreal.htm
As of Jan. 28, 2009 193 countries had signed the Montreal Protocol. The treaty has
been very successful, reports the US Environmental Protection Agency which is responsible for controlling chemicals that deplete the ozone layer.
institute for international business - global forum report 2012
19