From its Aboriginal beginnings, to French and British colonization, to its large, modern-day immigration communities of Latin Americans, Canada has always sustained an ethnically and culturally diverse population. Canada absorbs more immigrants per capita than any other country. Although it is the second largest country in the world after Russia, an average of only three people inhabit each square kilometer. Known for its cold, sprawling northern frontier, Niagara Falls, and maple-leafed flag, Canada is a complex, multicultural nation with some important differences from its southern neighbor, the United States.
The North American Free Trade Agreement, involving Canada, the US and Mexico, has brought a trade boom for Canada. But thorny issues abound and often relate to the issue of subsidies. American moves, which impact on Canadian exports - in the form of tariffs on Canadian timber and increased subsidies for US farmers - have created particular tension.
The nation sustains an affluent, high-tech industrial society with a market-oriented economic system and high standards of living. Since World War II, the impressive growth of the Canadian manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one that is primarily industrial and urban. Real rates of growth have averaged nearly three percent since 1993. However, private sector forecasters estimated a slight slowdown in growth to 2.4 percent in 2000. This slowdown in growth is due in part to concerns of record high consumer debt and a low savings rate (2.3 percent in 1998). Nevertheless, low interest rates, net wage and employment gains, and fiscal stimulus may be impetus for growth.
Canada's unemployment rate has hit its lowest levels in recent history, dropping from 9.6 percent to seven percent. In the latter half of 2000, the Canadian labor market witnessed the creation of 187,000 new job openings. In the last few years, Canada has faced a critical shortage of skilled workers. Some industry experts call this a "brain drain," as the best and brightest Canadian workers are flocking to the United States in search of higher salaries. Experts fear that the shortage of skilled workers in some sectors could grow to one million by 2020.
Immigration has helped to make Canada one of the world's richest countries, and the country is largely free of racial tension. Many recent newcomers hail from Asia. Canada's indigenous peoples make up less than two per cent of the population. The way in which provincial governments share land and natural resources with native groups is an ongoing issue. To increase the skilled labor pool in Canada, the government has introduced legislation to make it easier for immigrants to enter Canada. A recent bill would eliminate the "occupations list" that awards points to immigrants with specific skills. The changes would also put a higher premium on family reunification by increasing the dependent-children category to include youths as old as 22. The age limit is currently 19.
Separatist aspirations within the predominantly French-speaking province of Quebec are a major domestic issue. The last referendum on the issue - in 1995 - saw advocates of an independent Quebec only narrowly defeated. Since then, opinion polls have indicated a fall in support for independence. The pro-independence Parti Quebecois was defeated in 2003's provincial election.
Canada's government is a confederation with parliamentary democracy. Queen Elizabeth II serves as the head of state under a constitutional monarchy. A democratically elected parliament is chosen at least every five years with the prime minister, chosen from the majority party or coalition, serving as head of the government.
Area: 9.9 million sq. km. (3.8 million sq. mi.); second-largest country in the world.
Cities: Capital--Ottawa (pop. 1 million). Other major cities--Toronto (4.5 million), Montreal (3.4 million), Vancouver (2.0 million).
Terrain: Mostly plains with mountains in the west and lowlands in the southeast.
Climate: Temperate to arctic.
Nationality: Noun and adjective--Canadian(s).
Population (2004 estimate): 32.1 million.
Ethnic groups: British/Irish 28%, French 23%, other European 15%, Asian/Arab/African 6%, indigenous Amerindian 2%, mixed background 26%.
Religions: Roman Catholic 44.4%, Protestant 29%, other Christian 4.2%, Muslim 2%, other 4%.
Languages: English, French.
Education: Literacy--99% of population aged 15 and over has at least a ninth-grade education.
Health: Infant mortality rate--5.2/1,000. Life expectancy--77.1 yrs. male, 82.2 yrs. female.
Work force (2005, 16.2 million): Goods-producing sector: 25%, of which: manufacturing 15%; construction 6%; agriculture 2%; natural resources 2%; utilities 1%. Service-producing sector: 75%, of which: trade 16%; health care and social assistance 11%; educational services 7%, accommodation and food services 7%; professional, scientific, and technical services 7%; finance 6%; public administration 5%; transportation and warehousing 5%; information, culture, and recreation 5%; other services 4%.
Type: Confederation with parliamentary democracy.
Confederation: July 1, 1867.
Constitution: The amended British North America Act of 1867 to Canada on April 17, 1982, Charter of Rights and Freedoms, and unwritten custom.
Branches: Executive--Queen Elizabeth II (head of state represented by a governor general), prime minister (head of government), cabinet. Legislative--bicameral parliament (308-member House of Commons; 105-seat Senate). Judicial--Supreme Court.
Federal-level political parties: Liberal Party, Conservative Party of Canada, Bloc Quebecois, New Democratic Party.
Subdivisions: 10 provinces, 3 territories.
Nominal GDP (2004): $991 billion.
Real GDP growth rate (2004): 2.9%.
Nominal per capita GDP (2004): $31,029.
Natural resources: Petroleum and natural gas, hydroelectric power, metals and minerals, fish, forests, wildlife, abundant fresh water.
Agriculture: Products--wheat, livestock and meat, feed grains, oil seeds, dairy products, tobacco, fruits, vegetables.
Industry: Types--motor vehicles and parts, machinery and equipment, aircraft and components, other diversified manufacturing, fish and forest products, processed and unprocessed minerals.
Trade: Merchandise exports (2004, customs basis)--$316.5 billion: crude petroleum and products, natural gas, motor vehicles and spare parts, lumber, wood pulp and newsprint, crude and fabricated metals, wheat. In 2004, 85% of Canadian exports went to the United States. Merchandise imports (2004)--$273 billion: motor vehicles and parts, industrial machinery, crude petroleum, chemicals, agricultural machinery. In 2004, 59% of Canadian imports came from the United States.
The bilateral relationship between the United States and Canada is perhaps the closest and most extensive in the world. It is reflected in the staggering volume of trade--the equivalent of over $1 billion a day in goods, services, and investment income--and people, more than 200 million crossings of the U.S.-Canadian border every year. In fields ranging from law enforcement cooperation to environmental cooperation to free trade, the two countries work closely on multiple levels from federal to local. In addition to their close bilateral ties, Canada and the U.S. also work closely through multilateral flora.
Canada--a charter signatory to the United Nations and the North Atlantic Treaty Organization (NATO)--has continued to take an active role in the United Nations, including peacekeeping operations, and is an active participant in the Organization for Security and Cooperation in Europe (OSCE). Canada joined the Organization of American States (OAS) in 1990 and has been an active member, hosting the OAS General Assembly in Windsor in June 2000, and the third Summit of the Americas in Quebec City in April 2001. Canada also seeks to expand its ties to Pacific Rim economies through membership in the Asia-Pacific Economic Cooperation forum (APEC), and will host the winter Olympic Games in Vancouver-Whistler, British Columbia in 2010.
Although Canada views good relations with the U.S. as crucial to a wide range of interests, it occasionally pursues independent policies at odds with the United States. In 2003, Canada did not participate in the U.S.-led military coalition that liberated Iraq (although it has contributed financially to Iraq's reconstruction). Other examples are Canada's leadership in the creation of and on-going support for the UN-created International Criminal Court (ICC) for war crimes, which the U.S. opposes due to fundamental flaws in the treaty that leave the ICC vulnerable to exploitation and politically motivated prosecutions and Canada's decision in early 2005 not to participate directly in the U.S. missile defense program. The United States and Canada also differ on the issue of landmines. Canada is a strong proponent of the Ottawa Convention, which bans the use of anti-personnel mines. The United States, while the world's leading supporter of initiatives, declined to sign the treaty due to unmet concerns regarding the protection of its forces and allies, particularly those serving on the Korean Peninsula, as well as the lack of exemptions for mixed munitions.
Trade and Investment
The United States and Canada have the world's largest bilateral trading relationship. In 2004, total merchandise trade between the two countries (census basis) was $445 billion, translating into over $1 billion in goods crossing the border every day. The two-way trade that crosses the Ambassador Bridge between Michigan and Ontario equals all U.S. exports to Japan. Canada's importance to the United States is not just a border-state phenomenon: Canada is the leading export market for 39 of the 50 U.S. States.
The comprehensive U.S.-Canada Free Trade Agreement (FTA), which went into effect in 1989, was superseded by the North American Free Trade Agreement among the United States, Canada and Mexico (NAFTA) in 1994. NAFTA, which embraces the 406 million people of the three North American countries, expanded upon FTA commitments to move toward reducing trade barriers and establishing agreed upon trade rules. It has also resolved long-standing bilateral irritants and liberalized rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the United States and Canada has more than doubled, creating many new challenges for the bilateral relationship. The Security and Prosperity Partnership, launched by all three NAFTA countries in 2005, represents an effort to address these challenges on a continental basis.
Canada is an urban services-dependent economy with a large manufacturing base. Since Canada is the largest export market for most states, the U.S.-Canada border is extremely important to the well-being and livelihood of millions of Americans.
The U.S. is Canada's leading agricultural market, taking nearly one-third of all food exports. However, imports of Canadian livestock products, particularly ruminants, fell drastically after the discovery of a single case of bovine spongiform encephalopathy (BSE, mad cow disease) in spring 2003. Shipments of most Canadian beef to the U.S. were resumed in late 2003 and trade in live cattle under 30 months resumed in July 2005. Conversely, Canada is the second-largest U.S. agricultural market (after Japan), primarily importing fresh fruits and vegetables and livestock products.
The U.S. and Canada enjoy the largest energy trade relationship in the world, with Canada being the single largest foreign supplier of energy to the United States--providing some 17% of U.S. oil imports and 18% of U.S. natural gas demand. Recognition of the commercial viability of Canada's oil sands has raised Canada's proven petroleum reserves to 180 billion barrels, making it the world's second-largest holder of reserves after Saudi Arabia. The electricity grids of the United States and Canada are closely linked and meet jointly developed reliability standards. Quebec is a major source of electricity for New England.
While 98% of U.S.-Canada trade flows smoothly, there are frequent bilateral trade disputes over the remaining 2%. Usually, however, these issues are managed through bilateral consultative forums or referral to World Trade Organization (WTO) or NAFTA dispute resolution. For example, in response to WTO challenges by the United States, the U.S. and Canadian Governments negotiated an agreement on magazines that will provide increased access for the U.S. publishing industry to the Canadian market, and Canada amended its patent laws to extend patent protection to 20 years. Canada currently has a number of challenges pending in NAFTA and WTO dispute settlement mechanisms related to U.S. trade remedy law, including actions taken by the U.S. Government on softwood lumber. The U.S. and Canada resolved a WTO dispute over dairy products in 2003. The United States and Canada also have resolved several major issues involving fisheries. By common agreement, the two countries submitted a Gulf of Maine boundary dispute to the International Court of Justice in 1981; both accepted the Court's October 12, 1984 ruling that delineated much of the boundary between the two countries' Exclusive Economic Zones (EEZs).
The United States and Canada signed a Pacific Salmon Agreement in June 1999 that settled differences over implementation of the 1985 Pacific Salmon Treaty. In 2001, the two countries reached agreement on Yukon River Salmon, implementing a new abundance-based resource management regime and effectively realizing coordinated management over all West Coast salmon fisheries. The United States and Canada recently reached agreement on sharing another trans boundary marine resource, Pacific Hake. The two countries also have a treaty on the joint management of Albacore Tuna in the Pacific, and closely cooperate on a range of bilateral fisheries issues and international high seas governance initiatives.
The U.S. is Canada's largest foreign investor. Statistics Canada reports that at the end of 2002, the stock of U.S. foreign direct investment in Canada was $183 billion, or about 65% of total foreign direct investment in Canada. U.S. investment is primarily in Canada's mining and smelting industries, petroleum, chemicals, the manufacture of machinery and transportation equipment, and finance.
Canada is the sixth-largest foreign investor in the United States. At the end of 2004, Canadian investment in the United States, including investments from Canadian holding companies in the Netherlands, was $134 billion at historical cost basis. Canadian investment in the United States is concentrated in manufacturing, wholesale trade, real estate, petroleum, finance, and insurance and other services.