Before this sea change in its economic history, Canada had chosen to protect itself with high tariff barriers. In the face of strong local opposition, particularly from the trades unions, the NAFTA agreement ended the domination of the Canadian economy by largely inefficient local industries. Instead, Canada saw the development of profitable capital-intensive industries and the loss of lower-income employment to Mexico. The only significant negative in this otherwise encouraging equation was Canada’s difficulty in attracting the same levels of investment as those enjoyed by the US and Mexico.

 

The threat of a ‘Buy American’ response to the global crisis caused considerable concern in Canada. The economic stimulus bill passed by the US senate in January 2009 contained a provision that required public works projects supported by federal funding to favour US steel suppliers. Steel is very much at the heart of the US-Canada trade relationship. In 2008 Canada’s steel exports to the US were US$4.8 billion, while Canada’s imports of US produced steel were US$5.5bn.

 

Canada’s political relationship with the US is also, and predictably, strong. Apart from trade and cultural links, the two countries defence relationship is one of the closest in the world. The Permanent Joint Board on Defense, established in 1940, provides policy-level consultation on bilateral defence matters and the two countries share North Atlantic Treaty Organisation (NATO) mutual security commitments. In addition, U.S. and Canadian military forces have cooperated since 1958 on continental air defence within the framework of the North American Aerospace Defense Command (NORAD). The military response to the terrorist attacks of September 11, 2001 both tested and strengthened military co-operation between the U.S. and Canada. The new NORAD Agreement that entered into force in 2006 added a maritime domain awareness component and is of ‘indefinite duration,’ albeit subject to periodic review.Approximately 2,500 Canadian Forces personnel are deployed at any given time in southern Afghanistan under a battle group based at Kandahar and as members of the Canadian-led Provincial Reconstruction Team (PRT) at Camp Nathan Smith in Kandahar. The Canadian Parliament has approved the extension of the mission in Kandahar until 2011.

 

These are the opening paragraphs of the Canada chapter in the Americas Review 2009 to be published in November 2009. To order your copy of the Americas Review 2009 simply click here