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FOREIGN TRADE
Trade accounts for roughly a third of GDP. Canada has signed two agreements with US- 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico), which has brought a trade boom for Canada.
The relationship, which Canada enjoys with US, is a major defining factor for Canada's dramatic increase in trade. The US and Canada have the world's largest trading relationship and US absorbs more than 85% of Canadian exports.
Main exports include motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity and aluminum.
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And machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumer goods are Canada's main imports.
However, some problematic issues often relating to the issues of subsidies continues to thrive between the US and Canada. 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.
CHALLENGES FACING CANADA
Despite being an affluent, high-tech industrial society, there are some issues, which can't be overlooked in the current scenario. As a result of globalization, Canadian enterprises are going to face even stronger competition from rivals in emerging economies in coming years. Despite some calls from business for a lower dollar or for government inducements to keep production in Canada, the most appropriate response is for domestic policy makers to redouble their focus on enhancing productivity growth and innovation in high and low technology sectors alike.
Globalization of competition, technological advances, and changes in the demographic structure of the workforce continue are three threats to the labour markets in Canada.
Also, to maintain steady improvements in living standards, despite increases in the old age dependency ratio and to ensure that public finances across all levels of government remain sustainable in the long term, especially given the upward pressures on publicly financed health care outlays, remain important challenges for the government of Canada.
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