Questions and Answers
(As of March 2018)
How much does Saskatchewan export to the United States?
Total Saskatchewan exports in 2017 were $29 billion.
The U.S. remains Saskatchewan’s number one market, by far, with just over half (55 percent) of our 2017 exports being shipped south (about $16 billion). However, Saskatchewan has been successful in diversifying our international markets and reducing our reliance on the U.S. market. Compared to the economies of Ontario and Quebec, which export between 70 and 80 percent of their goods to the U.S., Saskatchewan is considerably far more market diversified.
Indeed Peter Hall, Vice President and Chief Economist at Export Development Canada, has noted that “Saskatchewan has led the way in something we like to call trade diversification. About a quarter of all trade from Saskatchewan ends up in emerging markets. In fact, you probably have a playbook that the rest of the country could use.”
Saskatchewan ships goods to over 150 countries around the world.
What does Saskatchewan export into the U.S.?
Our exports to the U.S. reflect the propulsive sectors of our economy. The most significant Saskatchewan export into the U.S. is oil and associated products at approximately $7.3 billion in 2017. Other major commodities and resources exported include potash, canola (seed, meal, and oil), uranium, and grains. Significant manufactured goods shipped include steel (line pipe), wood products, farm machinery (seeders and planters), and motor vehicles. See Total Saskatchewan Exports to the U.S. by Product.
What does Saskatchewan import from the U.S.?
In 2017, we received $9.8 billion in goods from the U.S. Reflecting our integrated supply chain, oil is the number one import from the U.S. Herbicides, agricultural machinery (e.g. harvesters), recreational trailers, and motor vehicles also figure prominently.
Which states receive most of our exports?
Minnesota received 11 percent of total Saskatchewan exports or 20 percent of Saskatchewan exports to the United States in 2017 amounting to $3.2 billion.
If each state in the U.S. was considered a country, Minnesota would be our second largest export market just behind China. Illinois, Montana, and Texas would be third, fourth and fifth largest followed by India in sixth place. Saskatchewan sources just under half of our total U.S. imports from North Dakota, Illinois, Texas, Iowa, and Indiana. See Saskatchewan Trade Balance by U.S. State
Does Canada have a trade balance or deficit with the U.S.?
The primary reason President Trump called for a renegotiation of NAFTA was due to his claim that the U.S. has a trade deficit with Canada (the U.S. buys more than they sell to Canada). Setting aside the widely-held belief that trade surpluses/deficits change significantly from year to year and are not the best proxy for evaluation, evidence shows that the U.S. has a trade surplus with Canada. In fact, the President’s own economic advisory council released a White House-endorsed report in February noting that “The United States ran a trade surplus of $2.6 billion with Canada on a balance-of-payments basis.” It went on to say that “Trade and economic growth are strongly and positively correlated.” President Trump personally endorsed and signed the forward to the report.
What about our trade with Mexico?
Canada shipped $7.8 billion in goods to Mexico in 2017 with 10 percent of that ($780 million) originating from Saskatchewan – mostly in the form of canola products, wheat, lentils, canary seed, liquefied propane and potash. Saskatchewan imported a variety of products from Mexico including casings for oil and gas drilling, truck and truck tractors, motor vehicles, and herbicides. The most significant food products brought in from Mexico were peppers and strawberries. Total imports from Mexico to Saskatchewan amounted to $229 million in 2017
What is NAFTA?
NAFTA is a comprehensive agreement signed in 1994 that sets the rules for international trade and investment between Canada, the United States, and Mexico. Prior to NAFTA, Canada and U.S. trade relations were governed by the 1989 Canada-U.S. Free Trade Agreement.
When implemented, NAFTA immediately lifted tariffs on the majority of goods produced by the NAFTA partners and called for the phased elimination of most remaining barriers to the movement of goods and services between the three countries. On January 1, 2008, the last remaining tariffs were removed within North America.
How have we benefited from NAFTA?
Most economists agree that NAFTA has been economically beneficial for the U.S., Canada, and Mexico.
NAFTA has created the largest free trade area in the world, a trading bloc that links over 480 million people producing nearly $21 trillion worth of goods and services each year. The three NAFTA partners account for 28 percent of the world’s GDP with less than 7 percent of the population. Under NAFTA, annual two-way trade between Canada and the U.S. has more than doubled to $703 billion. Trade between the three members quadrupled to $1.47 trillion. That increase in trade boosted economic growth, profits, and jobs for all three countries. The U.S. Chamber of commerce notes that 14 million jobs in America are supported by the increase in NAFTA trade.
Has the U.S. applied protectionist tariffs in the past?
Using similar arguments expressed by President Trump today, the United States implemented the Tariff Act (Smoot-Hawley) in 1930 which increased duties on nearly 900 American imports. Canada retaliated by imposing new tariffs on 16 products that accounted for approximately 30% of US exports. 22 other trading partners also implemented retaliatory actions. The Tariff Act brought international trade almost to a standstill and exacerbated and lengthened the Great Depression.
On 15 August 1971, President Richard Nixon imposed a 10% surcharge on imports in an effort to force other countries to revalue their currencies against the US. dollar. The import surcharge was lifted four months later.
Are there other U.S. trade issues that are of concern?
There are trade issues not directly covered by NAFTA that Saskatchewan needs to be concern about including protectionist policies such as Buy America, the Softwood Lumber Agreement, Country of Origin Labeling (COOL), and steel and aluminum tariffs.
What happened to the Softwood Lumber Agreement (SLA)?
Most forests in Canada are provincially-owned, while in the U.S. they’re privately-owned. The U.S. has alleged that that allows Canadian producers to sell their lumber at a lower price, undercutting American producers in the process. The Americans say that amounts to a subsidy, a claim Canada has successfully fought at the World Trade Organization.
While we’ve been able to secure trade peace over lumber for periods of up to eight or 10 years, softwood lumber has largely remained a “managed trade” issue. The last SLA ended in October of 2015 and negotiations toward a new agreement did not produce a successful outcome. In November of 2016, the U.S. launched a countervailing duty and anti-dumping investigation against Canadian imports On April 24, 2017; the U.S. Department of Commerce issued a preliminary determination on subsidy and assessed preliminary countervailing duty rates of around 20%.
While most of Saskatchewan’s wood product exports to the U.S. are in oriented strand board ($238 million in 2017) and not part of the SLA, softwood lumber is a significant business component of some our lumber mills in Saskatchewan. In 2017, dimensional lumber shipped to the U.S. amounted to $89.5million.
What can business or industry do to help?
While trade negotiations are a federal responsibility, each province is providing input and the Government of Saskatchewan has developed an engagement strategy. Premier Brad Wall has already visited Iowa and Washington D.C. and lobbied legislators on our behalf. Businesses and industry associations must also join the effort and communicate key messages in this document whenever and wherever they meet with their American partners.
As well, businesses may participate in the consultation process launched by the federal government. More information can be found here:
http://gazette.gc.ca/rp-pr/p1/2017/2017-06-03/html/notice-avis-eng.php#na8
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