Sample Essay

The United States is the main customer and trading partner of Canada. Canada trades with the US worth $1.3 billion on a daily basis. This makes the country very much susceptible to the economic market condition and market stability of the United States for the positive balance of payments position.

“Canada’s economy is growing steadily stronger and business conditions are more favourable than they have been in years. But Canada’s dependency on the US, which consumes almost 86 percent of total Canadian exports, means that Canada’s newfound economic success could come to an abrupt halt as the US economy slows. Two factors–ongoing Canadian government reforms and growth in Canada’s Internet economy–could soften the blow to Canada as the US economy sinks.” (Hansen, 2001) As a result while it may seem that Canada is an independent country with a growing economy & GDP, the country is only sustaining and deriving its economic position and high levels of GDP on the performance of the US economy. This trend has been increasing since 1995 as since then the export based GDP contribution of Canada derived from the trade with the United States has increased from 77.5 in 1995 to 85.8 by 2000. Thus clearly depicts that a fall in the exports by Canada to the Unites States can cause a deficit in the balance of payments for country.

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