U.S.

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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
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TOP 10 U.S. TRADING PARTNERS 2005
Source U.S. Bureau of Census
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U.S. EXPORTS TO NORTH AMERICAEXCEEDING THOSE TO
OTHER REGIONS 2005
NAFTA 36.7
Source U.S. Bureau of Census
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U.S. TRADE IN PERSPECTIVE 2005
Source U.S. Bureau of Census
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U.S. NAFTA TOTAL TRADE 1990-2005
Source U.S. Census Bureau
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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, thats 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.

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U.S. CANADA TRADE
Source U.S. Bureau of Census
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CANADA TRADE
SHARE OF CANADIAN IMPORTS 2005
SHARE OF CANADIAN EXPORTS 2005
Source World Trade Atlas
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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
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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

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MINNESOTA TRADE
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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 Minnesotas exports go to the
  NAFTA region.
• CANADA Canada is Minnesotas 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.

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SHARE OF MINNESOTAS MERCHANDISE EXPORTS ,
2005 28 PERCENT WENT TO NAFTA
Source U.S. Bureau of Census
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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

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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

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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)

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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

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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

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2006 Initiatives

• Five SPP Cancun priorities
• Smart, secure borders
• Energy security
• Emergency management
• Avian and Pandemic Influenza
• North American Competitiveness Council

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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

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Next Steps

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

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Why Canada First?

• 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

• 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

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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

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80 of Canadas Population
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Understanding the Differences
A relatively small and dispersed Canadian
population

• Culture
• Metric system
• Labeling
• Taxes

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Best Prospects for U.S. Exports to Canada (2006)

• 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)

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Canadian Market Entry Strategies

• APPOINT AGENT
• APPOINT DISTRIBUTOR
• FORM STRATEGIC ALLIANCES
• ESTABLISH BRANCH OFFICE IN CANADA

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ITA Can Help
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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)

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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

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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.

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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

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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

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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

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Contact Information

• Phone [phone]
• Fax [phone]
• Andrew_Rudman_at_ita.doc.gov
• NAFTA Website
• www.mac.doc.gov/nafta/compliance