Quebec Referendum Case Study

One political issue however that Canada faces is the Quebec Referendum and the desire of some French Canadians living in Quebec for Quebec to become a sovereign and independent country. There have two recent referendum motions in Quebec, the first in 1980 and the second more recently in 1995 where the difference between voters electing to remain as part of Canada and those wanting an independent Quebec sovereign was very close (50.6% voted No and 49.4% voted Yes). The reason to separate is based on the language and cultural differences between French Canada and the rest of Canada which is predominantly English speaking. The issue here is that Quebec is the second most populous province in Canada and the largest province by area (“Quebec,” n.d.). Furthermore, Quebec has abundance of natural resources. It has about 30 mines where minerals such as gold, iron, and copper are extracted. It also has a large supply of fresh water including the Saint Lawrence

river. It also has a strong economy. In fact, Quebec represents 20.4% of the total GDP of Canada (“Quebec,” n.d.). These factors are significant to Canada and there is a real risk that a Quebec referendum may destabilize the Canadian economy and the country as a whole.

With regards to trade, Canada is currently the second largest trading partner for the U.S. with an estimated “$662.7 billion of goods and services in 2015, of which $337.3 billion were exports and $325.4 billion imports. U.S. exports to Canada account for 18.6% of overall U.S. exports in 2015” (“Canada | United States Trade Representative,” 2017). Thus, the U.S. and Canada have a very strong trading relation and are two of the biggest trading partners in the world. This trading relationship has been greatly facilitated by the North American Free Trade Agreement (NAFTA) which was established between the U.S., Canada, and Mexico in 1993 and removed many of the trade barriers between the three countries (“The World Factbook: Canada,” 2017). The effect of NAFTA on trade between the two countries has been significant, U.S. exports to Canada are up 179% from 1993 (pre-NAFTA) and U.S. imports from Canada are also up 165% dating back to the same time period (“Canada | United States Trade Representative,” 2017).

One possible risk to the U.S. - Canada trading relationship is that the newly elected president of the United States, Donald Trump, has expressed his desire and willingness to renegotiate or even withdraw the U.S. from NAFTA. This will have a significant effect on trading between the two countries and the U.S. economy in general given that a significant portion of U.S. exports and imports are from Canada. Furthermore, the economies of the two countries are closely aligned and this drastic measure will affect Canada as well and not just the U.S. posing a significant risk to any U.S. company planning on exporting goods or services to Canada.

Even though the renegotiation of NAFTA or the withdrawal of the U.S.

from this trade agreement is a significant risk, it is slightly offset as there is still a likelihood that the U.S. government would negotiate a new bilateral trading relationship with Canada directly. In fact, prior to NAFTA, there was already a free trade agreement between the two countries known as the Canada – United States Free Trade Agreement (FTA) which was signed in 1988 (“The World Factbook: Canada,” 2017). The trading relationship between the two countries is simply significant and it is inconceivable that an adequate replacement, which would address the concerns and flaws of NAFTA, would not be found. Furthermore, President Trump has stated that some of his concerns with NAFTA include the migration of U.S. jobs and factories to Mexico, meaning that the trading relationship with Mexico is of a bigger concern and a renegotiation of NAFTA would affect the U.S. – Mexico relationship more than it would affect the U.S. – Canada

relationship.

In summary, the political and legal system in Canada is very stable and favorable for a U.S. company to do business there. The country is well governed, with a strong legal system, and is safe and peaceful. There is also a very strong trading relationship between the two countries as they are two of the biggest trading partners in the world. Although there some risks relating to U.S. companies doing business in Canada, including the Quebec referendum and the renegotiation of NAFTA, however these risks are not believed to be significant as the infrastructure is there for U.S. companies to export and do business with their neighbors to the north.