United States-Canada Trade and Economic Relationship: Prospects and Challenges

The United States and Canada conduct the worlds largest bilateral trade relationship, with total merchandise trade exports and imports exceeding 596.9 billion in 2008. The U.S.-Canadian relationship revolves around the themes of integration and asymmetry integration from successive trade liberalization from the U.S.-Canada Auto Pact of 1965 leading to North American Free Trade Agreement NAFTA, and asymmetry resulting from Canadian dependence on the U.S. market and from the disparate size of the two economies. The economies of the United States and Canada are highly integrated, a process that has been accelerated by the bilateral U.S.-Canada free trade agreement FTA of 1988 and the NAFTA of 1994. Both are affluent industrialized economies, with similar standards of living and industrial structure. However, the two economies diverge in size, per capita income, productivity and net savings.