Why Trade Matters
Trade and the Canadian Economy
NAFTA: A Treaty, a Foundation, a Past, a Future...
Stories of the Week - June 23, 2003:
The North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico came into being in January 1994, creating a vast free-trade zone.
This treaty includes a set of rules governing trade between the three signatory countries, with a view to increasing trade and investment. These rules deal with investment, services, intellectual property, competition and temporary entry for business people.
Some ten years later, trade between Canada, the United States and Mexico is faring quite well. Trade in goods and services between Canada and the United States is worth around $2 billion per day.
Similarly, Canadian exports to Mexico have doubled and imports of Mexican products to Canada have tripled during this time.
Capitalizing on this regional development thrust has proven to be particularly advantageous for Canada: our economy has continued to grow at an average annual rate of 3.8 percent since NAFTA entered into force.
NAFTA has definitely helped raise the quality of life of Canadians and created business opportunities for Canadian companies in the United States and Mexico.
What is more, NAFTA has proven its value as a means of stimulating trade, investment and competitiveness. We now have an opportunity to replicate the success of the NAFTA, this time in a hemispheric context, through the Free Trade Area of the Americas (FTAA).
This edition of Stories of the Week turns its attention to companies that are thriving thanks to NAFTA.
Stories of the Week - June 23, 2003
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Not Just Ball Bearings
BC Bearing Engineers Limited, Burnaby, British Columbia
When BC Bearing Engineers Limited started off in 1944, the small family business stocked a single product line of ball bearings. Today, it is one of the largest Canadian privately owned distributors of industrial products and services, with more than 100 different product lines. Operations throughout Western Canada and the Western U.S., as well as in Mexico, Chile and Peru together employ more than 350 people and serve thousands of clients worldwide.
Exports became an integral part of the company's expansion plans in 1979. "We recognized long before NAFTA that North America was going to become even more significant as a trading block within the world marketplace. So, we expanded first to the U.S., then Latin America," says CEO Wendy McDonald. "With NAFTA in place, our company, like most Canadian exporters, is more competitive in today's international marketplace. The government's anticipation of the ongoing changes in global economics and the timely implementation of NAFTA in 1994 have enhanced our means to expand internationally. This has facilitated our growth and created jobs in our distribution network and, while markets become ever more integrated, we are now even better positioned to serve our clients across all borders."
Some of the diverse industries served by BC Bearing include pulp and paper, mining, oil and gas, petrochemicals, food processing, transportation, agriculture and forestry/lumber. The company has twice been named as one of Canada's Top 50 Best Managed Private Companies and twice as Canadian Power Transmission Distributor of the Year.
Resounding Success in the U.S.
KDM Electronics Inc., Scarborough, Ontario
When Ron Bull found that the domestic market for speaker and sound systems went flat in the late 1980s, he turned his eyes southwards. And, since the implementation of NAFTA, he hasn't looked back.
"Being highly specialized and niche-oriented, we need a sizable market," says the president of KDM Electronics Inc., a family enterprise of six people that designs and manufactures central and multi-location speaker systems, as well as voice and music sound systems. "With an industrial and commercial market eight times the size of Canada's, the United States fits the bill. And it's all one level playing field, due to NAFTA."
Over the past decade, exports to the U.S. by the Scarborough-based company have jumped to 85 percent of total production. Bull attributes much of this growth to the excellence of Canadian goods. "Many of us don't realize that a 'Made in Canada' product conjures up quality in the eyes of Americans," he says, "and as long as you're competitive, the border is transparent. For KDM that's crucial, as we often deal with small, family-owned businesses who don't want the hassles of regulations and tariffs. What they do require is a stable trading relationship, and with NAFTA, that's what we have."
KDM systems can be found across North America in large facilities such as gymnasiums, convention centres, hockey rinks, shopping malls, warehouses and factories. They are also being used as the public address system for the 100,000-square foot Boeing Delta rocket facility at the Kennedy Space Centre in Cape Canaveral, Florida.
Serving the NAFTA Community
SGT Inc., Saint-Germain-de-Grantham, Quebec
Think of trade and what comes to mind? Typically, merchandise. But it's freight carriers like SGT Inc. that move those goods across borders. From Alaska to the Yucatan, from Newfoundland to California, the Quebec-based company is going the distance.
Since its founding just over 15 years ago, SGT has become one of North America's most active road transport companies. In that period, the company's ranks swelled from 30 to 750 employees, while its fleet of mobile units grew from 100 to 1,600 vehicles.
SGT President Denis Coderre attributes much of this remarkable growth to NAFTA, which literally opened up borders for the young company, allowing it to penetrate the Mexican market and establish a sales office in Monterrey. "Since NAFTA came into effect, we have a lot more traffic from Mexico to Canada and the U.S.," says Coderre. "By easing restrictions and reducing tariffs, the agreement has facilitated the transportation of all kinds of products. For us, it has meant a boost in volume and more jobs."
SGT's fleet is managed from its headquarters in Saint-Germain-de-Grantham, located just off the Trans-Canada Highway. With strategically located terminals throughout Canada, the U.S. and Mexico, the company is able to accommodate virtually any transportation requirement on the continent. Among SGT's many awards, it was named one of Canada's 50 Best Managed Private Companies in 2002.
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