33. Trade and economic cooperation in America

On January 1, 1994, the North American Free Trade Agreement between the United States, Canada, and Mexico (NAFTA) entered into force.

All remaining duties and quantitative restrictions were eliminated, as scheduled, on January 1, 2008.

NAFTA created the world's largest free trade area, which now links 450 million people producing $17 trillion worth of goods and services.

Trade between the United States and its NAFTA partners has soared since the agreement entered into force.

By strengthening the rules and procedures governing trade and investment, the NAFTA has proved to be a solid foundation for building Canada’s prosperity and has set a valuable example of the benefits of trade liberalization for the rest of the world.

In 1993, trilateral trade within the North American region, as measured by each nation’s imports from its two NAFTA partners, was over US$288 billion while in 2012 it passed the $1 trillion mark.  Reflecting the prosperity and development of the region, the North American economy has more than doubled in size since 1994.  The combined gross domestic product (GDP) for Canada, the U.S., and Mexico was US$19.2 trillion in 2012 up from US$7.7 trillion in 1993. Canadian merchandise exports to the United States grew at an annualized rate of 4.4 percent between 1993 and 2012; and Canada’s bilateral merchandise trade with Mexico was close to $31 billion in 2012. Approximately 75.7 percent of Canada’s total merchandise exports were destined to our NAFTA partners in 2012. Total merchandise trade between Canada and the United States more than doubled between 1993 and 2012. Trade between Canada and Mexico has increased more than almost 7-fold over the same period.

Canada-U.S. trade in goods and services in 2012 reached close to $742 billion or 41 percent of Canada’s GDP. Canada is the largest market for U.S. services exports with Canada-U.S. services trade reaching nearly $107.6 B in 2012, a 167.3 percent increase. Canada was the main destination for United States merchandise exports in 2012, and was the second largest source of merchandise imports into the United States. Canada is the main foreign supplier of energy to United States (Mexico is 3rd), and is the 4th largest cumulative source of foreign direct investment (FDI) into the United States.

The enhanced economic activity and production in the region have contributed to the creation of jobs for Canadians with one in five jobs in Canada related to trade. With the addition of more than 4.7 million net new jobs during the period from 1993-2014, Canada’s unemployment rate has decreased from 11.4 percent (1993) to 7.2 percent (2012).

The NAFTA’s provisions ensure greater certainty and stability for investment decisions and have contributed to enhancing Canada’s attractiveness for foreign investors while providing more opportunities for Canadians to invest in NAFTA partners’ economies.

North America is home to approximately 459 million people, representing about one quarter of the world’s economy. Our integration helps maximize our capabilities, making our economies more innovative and competitive, creating a North America where Canadian, American and Mexican companies do more than sell things to each other – now, our companies increasingly make things together.

NAFTA has benefited North American businesses through increased export opportunities resulting from lower tariffs, predictable rules, and reductions in technical barriers to trade. Along with increasing exports and imports, firms have become more specialized and thus more competitive, allowing for them to make things together for customers within and beyond the NAFTA region.