Question of the Month
June
2004
What
is the extent of the trading relationship between the Midwestern
states and Canada?
The Canada–U.S. trading relationship
totaled more than $441 billion in goods and services in 2003, the
largest bilateral trading relationship in the world. Since the Canada-U.S.
Free Trade Agreement was signed in 1989 — which phased out tariffs
and many other trade barriers — trade has more than doubled.
Following the signing of the North American Free Trade Agreement, in
1994, trade between the two nations has continued to increase. Canada
is the largest trading partner for 39 states, including all 11 in this
region.
Michigan exceeded
all states in bilateral trade in 2002, with goods and services valued
at $66.6 billion. Much of this total is due to the highly integrated
nature of the transportation sector, with trade in autos, trucks and
auto parts totaling about $50 billion. The Michigan-Ontario border is
home to the two busiest U.S.-Canada commercial crossings
(Detroit-Windsor and Port Huron-Sarnia).
In 2002, transportation equipment was
the top export for five other Midwestern states — Illinois, Indiana,
Kansas, Ohio and Wisconsin — in their bilateral
trading relationship with Canada. In all, Illinois’ $19.7 billion
bilateral relationship with Canada accounted for 32 percent of the
state’s total exports. The percentages were even higher in some
other Midwestern states. In Indiana, for instance, the $10.4 billion
in cross-border trade with Canada accounted for 46 percent of the
state’s exports. Ohio had 55 percent of its exports ($23.9 million)
go to Canada in 2002. Wisconsin’s and Kansas’ bilateral trade with
Canada totaled $8.1 billion and $2.4 billion, respectively. Machinery,
especially tractors and tractor engines, was Iowa’s leading
export in its trading partnership with Canada. In all, Iowa sent $3.4
billion in goods and services north of the border.
Agriculture is another important
component of the Midwest-Canada partnership. Agricultural products are
the top exports to Canada from Minnesota ($8.9 billion total
bilateral trade relationship), Nebraska ($1.1 billion), North
Dakota ($1.6 billion) and South Dakota ($573 million).
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