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David M. Spooner

Assistant Secretary of Commerce for Import Administration

May 25, 2006

House Committee on International Relations, Subcommittee on the Western Hemisphere

Thank you Chairman Burton, Representative Engel, and Members of the Subcommittee for inviting me to discuss U.S.-Canada Relations. I appreciate the opportunity to share with you the Department of Commerce’s role in strengthening this vital relationship.

This afternoon, I will discuss the following aspects of our relationship with Canada:

  • The general state of U.S.-Canadian trade
  • The Security and Prosperity Partnership of North America
  • The Western Hemisphere Travel Initiative, and
  • The Softwood Lumber Agreement

President Reagan once described U.S-Canada relations as “the most productive relationship between any two countries in the world.” From the commercial perspective, the numbers speak for themselves. Two-way U.S. goods trade with Canada has increased by more than 185 percent since the implementation of the Canada-U.S. Free Trade Agreement in 1989.

Canada is our number one trading partner – with trade valued at 499 billion dollars in 2005 -- nearly 1.4 billion dollars each day. Canada purchased almost 314 billion dollars of goods from the United States last year – that’s roughly 23% of U.S. exports.

Of course, the aggregate trade numbers only tell part of the story. U.S. exports to Canada and Canadian exports to the U.S. actually exhibit a good degree of commonality. This suggests that in many vital sectors such as autos, Canada and the U.S. are working together to “co-produce” products.

Indeed, thousands of businesses have successfully integrated their operations on a regional basis to take advantage of convenience, quality, and capacity utilization differentials. This private sector-led process of building cross-border supply chains is crucial to keeping North America competitive.

But, we can’t stand still. We must consider collective action to enhance our regional competitiveness. Europe and Asia are fostering integration to improve their regional competitive positions, and we should do the same.

One of the tools we are using to boost our competitive position is the Security and Prosperity Partnership of North America, or SPP. The SPP recognizes that our security and economic agendas must be addressed within a regional framework. Our borders must be closed to terrorists, drug dealers, and human traffickers, yet remain open to legitimate trade. Indeed, our security and trade interests can be complementary.

When President Bush met with President Fox and Prime Minister Harper in Cancun, Mexico on March 30th and 31st, the three leaders agreed to advance the SPP by focusing on five high priority initiatives: 1) increasing competitiveness through the North American Competitiveness Council; 2) combating the potential spread of Avian flu; 3) securing and sustaining our energy supply through the North American Energy Security Initiative; 4) enhancing emergency response coordination; and 5) maintaining smart and secure borders.

As the federal agency responsible for fostering the foreign and domestic commerce of the United States, the Department of Commerce takes a keen interest in The Western Hemisphere Travel Initiative. We have heard from concerned U.S. business groups about potential border delays, the cost of compliance, and delays in obtaining appropriate documentation.

We understand these concerns, and are working with the Departments of State and Homeland Security to ensure that commerce remains strong after the Travel Initiative is fully implemented. Following the resolution of softwood lumber, the Travel Initiative is a top priority of the U.S.-Canada agenda.

Softwood Lumber

On April 27th, the U.S. and Canadian governments announced a framework for an Agreement to resolve the long-standing trade dispute on softwood lumber. This Agreement demonstrates the strength of the relationship between the United States and Canada and shows that we can resolve our differences in a cooperative spirit.

We expect the Agreement to provide stability in the North American lumber market, for producers and consumers alike. Under the terms of the framework, all litigation will end and the antidumping and countervailing duty orders will be revoked. The framework also addresses possible import surges from Canada, distributes duties currently being held, and includes dispute settlement provisions.

Cooperation with Canada on trade, security, and quality of life issues helps make North America the best place in the world to live, work, and do business. At the Commerce Department, we are building upon our strong relationship with Canada to further our common goals.

Thank you, Mr. Chairman.