Why do Canada and the United States have the largest bilateral trading relationship in the world? Canada and the United States have the largest bilateral trading relationship in the world due to the North American Free Trade Agreement (NAFTA) of 1994. This agreement was put in place to reduce trade barriers and encourage free trade. Canada and the United States share a border of over 5, 000 miles. Their relative location is an advantage lowering costs of transportation associated with trading when compared to shipping overseas. They share similarities in culture and language reducing possible barriers. They also share common infrastructure like bridges and roadways and tunnels. Why do Canadian products have such a large market share in the United States? Canadian products have a large market share in the U. S. because of many of the reasons stated above. The United States is also Canada’s largest foreign investor.
The appreciation of Canadian currency and low productivity contributes to low competitiveness on a global scale. Some of their largest exports is large machinery and heavy equipment. These are easily exported to the U. S. rather than overseas. While 98% of Canada-US trade flows smoothly, trade disputes only affect the remaining 2%. Some argue that the Canadians have overreacted in this case. What do you think? I think that Canada has legitimate reasons to raise disputes. Almost a quarter of its GDP goes to the United States and about one in seven jobs rely on trade with the U. S. Political actions such as COOL and tightening border control after 9/11 slow trade. These factors have a huge impact on Canadian economy.