As Paul Martin prepares to improve relations with
the United States, a new study dramatically reveals how costly
deteriorating ties have been to Canada's economy. The Fraser
Institute's 2003 Trade Survey, The Unseen Wall, released today, shows that a remarkable 96 percent of Canadian exporters surveyed believe that Canada/US relations have worsened
over recent months and - far more worrisome - two-thirds believe
it has damaged their ability to sell to the United States.
As a result, a significant number of Canadian firms reported
moving production to the United States or ceasing export
"As protectionist sentiment builds in the United States and even
business friendly media run anti-trade features, this survey
shows how much bad relations have cost Canadians in prosperity
and jobs," says Fred McMahon, principal author and director of
the Institute's trade and globalization centre.
The survey examines non-tariff, non-quota trade barriers:
discriminatory use of regulations, border delays, and
buy-national policies. The number of exporters who reported
facing such barriers has dramatically risen from 45 percent in
2002 to 72 percent in the 2003 survey.
"A third of everything produced in Canada is exported to the
United States, with the trade surplus alone equal to nearly 10
percent of our economy," McMahon noted. "That surplus puts the
lie to the view the United States is a trade bully, but provides
a rich target for US protectionists and nationalists who, like
their Canadian counterparts, invoke cries of 'sovereignty' to
protect national interests and jobs."
- 72 percent of survey respondents reported facing unofficial
- 96 percent said Canada-US relations have worsened over the
last 12 months and two-thirds said this has negatively affected
their ability to export into the US market.
- 100 percent of defense and aerospace firms said US
buy-national policies formed a barrier to trade.
- The automobile sector reported the fewest barriers, with 45
percent of respondents saying they faced no unofficial
- 13 per cent of firms facing discriminatory regulations and
8 percent of firms challenged by buy-national policies withdrew
from the US market. 12 percent of firms facing buy-national
policies opened up US production facilities.
- 72 percent of respondents found the NAFTA dispute
settlement mechanism either very effective or somewhat
effective; 57 percent found the WTO mechanism very effective or
- Harmonize regulatory standards to eliminate the use of
- Improve Canadian security measures to alleviate border
delays related to security concerns.
- Launch negotiations to broaden and deepen NAFTA, with an
emphasis on developing a more effective and speedy dispute
settlement mechanism. Also negotiate clauses to eliminate
buy-national and buy-local policies on both sides of the
- Initiate discussions about developing a customs union with
the United States.
Five hundred companies were surveyed and 107 firms responded (a
21.4 percent response rate). Very small to very large exporters
are represented in the survey, from companies with US exports of
$10,000 to $2 billion. Responding firms represented a broad range
of dependence on the US market, with US exports representing from
0.5 percent to 100 percent of company sales.
As Michael Hart, Simon Reisman Professor of Trade Policy at the
Norman Paterson School of International Affairs, Carleton
University, writes in his foreword, the study "provides valuable
information on how those on the frontlines of Canada's trade with
the United States view at least some of the barriers they face in