Little Known Facts about Canada and the Coatings Industry
As the new year begins, it is always interesting to take stock of things to come. This is especially true for trade between the United States and Canada. A new administration has been installed in Washington, which has said it will focus on its current trading relationships around the world. Canada stands to benefit from some of the views expressed, particularly in terms of energy self-sufficiency and possibly further bilateral trade. Canada has only 10 per cent of the population of the United States, but the trading relationship means more than the number suggests. In effect, both countries are joined at the hip, with 75 per cent of Canada’s population living within 100 miles of the U.S. border.
Canada and the United States are NAFTA partners and participate in a range of multilateral organizations including the UN, NATO, the G7, OAS and APEC. Both countries are each other’s largest trading partners - in fact, the largest in the world - with two-way trade of more than US$690 billion in goods and services in 2015. That represents $2.4 billion in goods and services every day. The U.S. trade deficit in goods for 2015 was US$15 billion, but its surplus with Canada in services reached US$27.1 billion. Canada buys more from the United States than does any other nation, including all 28 countries of the European Union combined, with a trade deficit in that relationship for the U.S. of around US$200 billion. Canada is also the number-one purchaser of goods from 38 states. Finally, the United States is the most important destination for Canadian direct investment abroad, which totalled $448 billion in the U.S. in 2015.
It is clear that Canada and the United States are critical economic partners, which has served both countries well. Another huge benefit of such an economic partnership, for the most part, is the minimal concerns related to security of goods movement. However, both sides remain vigilant, especially at the border, and both countries have strong regulations for the transportation of dangerous goods, as they should. There are many cross-border movements in many economic sectors, which are free of tariffs under NAFTA, with paint and coatings being one of them. As well, 75 per cent of the cross-border flow of goods is intracompany shipments by multinational companies. It is little wonder that both Canadian and U.S. industry have been consumed with ongoing efforts on regulatory alignment including the work plans under the Canada-United States Regulatory Cooperation Council and the recently exhaustive effort each placed on getting alignment for the Globally Harmonized System for Chemicals in the Workplace (GHS). The new GHS regime will come into full effect in June of this year for manufacturers and in June 2018 for distributors. In some cases manufacturers act as distributors with respect to their own raw material supply and as such will have an additional year to transition, if needed.
While the United States and Canada are like-minded on the importance of strong economic linkages, which will likely be the case for the foreseeable future, there will be differences in how each addresses other issues like the environment. As we all know, economic and environmental issues are tied very closely, and each government’s policies will have an impact in the ongoing trade relationship between the two countries. Suffice it to say, the United States will be focused squarely on economic matters such as creating jobs for the middle class and addressing the growing budget and trade deficits. Both governments have said that one way they will grow the economy is new investment in infrastructure.
Canada, on the other hand, is focused on the environment, strongly supporting initiatives like the Paris Accord and the recently announced carbon pricing policy. It has decided to ignore a balanced budget in favour of deficit financing to fund new infrastructure as a way to prime the pump of the Canadian economy. The recently announced $186 billion in new infrastructure investment over 10 years is meant to help grow the economy and fortunes of the middle class. Both countries are coming at growth from two different policy perspectives. It remains to be seen how these two approaches will mesh and how it may impact the trading relationship.
For the sake of the existing and long-standing, stable economic relationship between the two countries, industry remains hopeful that it will be more business as usual, at least. If not, the economic progress and stability of both countries will be greatly diminished.