Argumentative Essay on Canada’s Trade with the United States

Argumentative Essay on Canada’s Trade with the United States

Introduction

Canada trade with the United State is a good thing. It resulted in the establishment of NAFTA an agreement between Canada, the United States and Mexico. In my opinion, the best part is the NAFTA agreement is establishing a relationship among the developed and developing nations which were not in existence before. Trading between Canada has fostered excellent relationships helping both countries build trust as an effort of NAFTA. Trade between the United States and Canada is free, which has strengthened both between these neighbouring countries. The economic prosperity of the two countries has been accelerated by NAFTA and the FTA Canada-US Free Trade Agreement.

The trade agreement between these countries has reduced and curbed illegal immigration. NAFTA has been beneficial to both Canada and the United States looking at the 2o years financial effects it has had to these countries. It thinks people should have unending support to NAFTA due to its success (Hufbauer, 2005). This paper will explore the benefits of Canada trade with the United States have to its economy.

Background

Canada’s trade with the United States has a historical record. The United States is the firm and most influential trade partner it has had hence boosted its economy. Both countries trading relationship is among the largest worldwide. It resulted in the formation of the North America Free Trade Agreement between the US, Canada and Mexico in 1994. The agreement has led to economic prosperity among the member countries since its formation. Both America and Canada are privileged to have a financial relationship which offers job opportunities to the two countries among other benefits.

Evidence

Economic Relationship

Since NAFTA came into being Canada has doubled in terms of its economy trading with the United States. Canada and the United States have a$ 1,4 trillion trade relationship. Both countries have a two-way trade for their goods and services. For instance, in 2014, the business added up to $759 billion. The bilateral Investment stock was $688 billion. Canada is the first export market for the United States. We can, therefore, say that the economic growth of the United States is grown in Canada. About 20% of Canada’s GDP results from exports to the US. Canada is the leading distributor of electricity, oil and natural gas to the United States. About 40% of the crude oil imported to the United States comes from Canada (Zestos & Tao, 2002).

Leading Trading Partners

Canada and the United States exchange more than $1.5 billions on services and goods on day to day basis. These make them the most significant trading partners among each other. The exports from the United States and Canada double those of other countries such as Singapore, China, Japan and South Korea. The economy of Canada is boosted by the exports taken to the state of Michigan as it does to the European Union. For instance, travellers from Canada resulted in 23 million visits to the United in the United States using approximately $27 billion in 2013. It makes Canada the most prominent foreign market for the United States goods and services. It exports products to thirty-four states in the United States out of the fifty states. On the other hand, Americans travellers in Canada used up to $9 billion in the same year. A large number of Canadian students attend United States schools and vice versa.

Investment Partners

The United States is the necessary investment for Canada with an investment stock of approximately $300 every year. Canada is among the most significant origin of Foreign Direct Investment in the United States. The Canadian firms found in the United States subsidiaries offer about half a million job opportunities with a maximum wage range of $65,000 per year. We can, therefore, argue that the right trade relationship between Canada and the United States leads to economic prosperity.

NAFTA means suitable for the economy. That means creating more job opportunities, productivity, altering the wages of an ordinary American and Canadian and changing the customer’s prices (Hakobyan & McLaren, 2016).

Many have a stereotype concerning the trade relationship between Canada and the United States as being wrong. Many argue that the economy of the United States belittles that of Canada hence bringing lots of challenges to Canada. NAFTA, however, open opportunities and a market for Canada’s imports. They claim that it has resulted in t massive competition to the small scale business in Canada. The economy of Canada is influenced by some United States slowdowns found in the bilateral exchange rates. Regardless of the disputes that have arisen between Canada and the United States, they have always been solved through NAFTA settlement procedures (Gagné, 2000).

It is through NAFTA that Canada can enjoy the advancement and great strides in its economy in the past twenty years. Canada’s foreign investment directly to the United States has increased up to 233% over the years. Canada has been able to a wide range of goods maximising on its trade volume.

The trade relationship between the United States and Canada is among the top with the leading being that of China and the United States. Both countries depend on each other. For instance, a large number of jobs in the US rely on imports from Canada. Canada, on the other hand, is heading external energy supply to the United States. In cases whereby Canada would not be the leading energy supply, this would impact the economy of the United States negatively.

Conclusion

What we learn from this study is that Canada is critical to the United States. Thousands of United States citizen live in Canada, and millions visit each year and the vice versa. They have the most exceptional bilateral energy relationship as Canada imports most of its oil to the US. Since the establishment of NAFTA, both countries have merchandised freely first job opportunity and setting successful records for the natives of Canada and US (Caliendo & Parro, 2015).

All these benefits are advantageous to the citizens as they enjoy the excellent economy through reduced tariffs by a large number of imported commodities for their businesses and lowering technical barriers for exchange. The unique relationship in trade fosters harmony hence improving on co-operation. Both countries have formed strong ally bonds thus can assist one another in times of problems, therefore, promoting stability.

References

Hufbauer, G. C. (2005). NAFTA Revisited: Achievements and challenges. Peterson Institute.

Zestos, G. K., & Tao, X. (2002). Trade and GDP growth: causal relations in the United States and Canada. Southern Economic Journal, 859-874.

Gagné, G. (2000). North American free trade, Canada, and US trade remedies: An assessment after ten years. The World Economy, 23(1), 77-77.

Caliendo, L., & Parro, F. (2015). Estimates of the Trade and Welfare Effects of NAFTA. The Review of Economic Studies, 82(1), 1-44.

Hakobyan, S., & McLaren, J. (2016). Looking for local labour market effects of NAFTA. Review of Economics and Statistics, 98(4), 728-741.