Thanks, Vice-Chairs Hoback and Ramsey and honourable members. Thank you for the opportunity to appear before you today.
As Vice-Chair Hoback mentioned, I'm CEO of the Council of the Great Lakes Region. We were established in 2013 as a binational non-profit working with government, business, the private sector, and non-profit associations to deepen the U.S.-Canada relationship, and also to find new ways of harnessing the region's economic strengths. My remarks today will focus on three elements: the importance of a strong North American economy, the significance of the Canada-U.S. economic partnership, and the critical role that cross-border economies like that of the Great Lakes region have in strengthening their competitiveness and long-term prosperity. I hope they are helpful as you deliberate on Canada's trade and investment relationships with the United States and Mexico.
Let me say first that North American trade and investment, cemented in NAFTA, are a work in progress politically and economically. From a macroeconomic perspective, NAFTA has been very beneficial to all three countries. In fact, as you've probably heard over the last couple of weeks, overall merchandise trade among Canada, the U.S., and Mexico has more than tripled since 1993.
Taking a deeper look, during this time U.S.-Mexico trade grew substantially according to the U.S. congressional research service. U.S. goods exports, for example, increased from $40.6 billion in 1993 to over $230 billion in 2016, an increase of 455%, whereas U.S. goods imports from Mexico increased from $40 billion in 1993 to $290 billion in 2016, an increase of 637%. As a result, there is a modest trade deficit that exists between the U.S. and Mexico, roughly $63 billion. Conversely, the U.S. congressional research service, in a recent NAFTA study, showed that in 2016 the U.S. had a services trade surplus of roughly $10 billion with Mexico.
The growth in merchandise trade between Canada and the United States, however, has been more subdued. U.S. exports to Canada are up 165% from 1993 levels, growing from $100 billion in 1993 to $270 billion in 2016, while U.S. imports from Canada are up 150% from 1993 levels, growing from $110 billion in 1993 to $278 billion in 2016. As you will notice, a modest trade deficit between the U.S. and Canada exists, which is principally due to fluctuating energy prices and again, like Mexico, based on USTR figures, the U.S. has a services trade surplus with Canada, which, in 2016, was approximately $25 billion.
Finally, with respect to Canada and Mexico, even though bilateral trade is growing, the flow of trade is seriously imbalanced. In 2016, Canada imported roughly 33 billion dollars' worth of goods from Mexico, while Mexico imported only roughly $8 billion in goods from Canada. Taken together, this snapshot of continental and bilateral trade shows why NAFTA is such a complicated story. On the one hand, NAFTA accelerated market liberalization, private sector modernization, and public sector reform in Mexico. On the other hand, NAFTA stretched commerce and supply chains from the north to the south, redirecting factory jobs and investment.
In many respects, ever since NAFTA was enacted, the continent has been operating at two speeds, largely in Mexico's favour. The latter shouldn't come as a surprise to anyone, and seeing Mexico succeed has short- and long-term economic benefits: better workplaces and wages, better education, better government, and better security.
However, ask a factory worker in Ontario, Quebec, Wisconsin, or Ohio, and they will tell you that adjusting to NAFTA and Mexico's rise has been tough. A lot people feel left out in today's climate of borderless trade, investment, and mobility, and a growing number of people are feeling left behind as the digital or knowledge economy takes hold. That's what I'm hearing and seeing across the binational Great Lakes region, which spans two provinces and eight states, and which is home to 107 million Canadians and Americans. With economic output estimated at $6 trillion in 2016, the region accounts for 30% of combined Canadian and U.S. economic activity. If it were a country, this region would equate to the third-largest economy in the world, behind the U.S. and China.
When you look at NAFTA modernization, you can probably gather that it's a frightening prospect but also a significant opportunity for the Great Lakes region. If we can't find a way in these negotiations to optimize our cross-border supply chains and transportation networks, we will lose an important opportunity to enhance our shared competitiveness. If we can't find ways within these negotiations to share traditional and low-carbon energy resources, we will lose an opportunity to provide affordable energy choices to fuel our homes, businesses, and industries.
President Trump won largely because of unexpected support in these three Great Lakes states—Wisconsin, Pennsylvania, and Michigan—where many voters turned to him because they were disillusioned by job losses in manufacturing. But these states, and the other five that make up our shared economic region, also rely on Canada to support roughly 2.2 million good-paying jobs.
President Trump is a deal maker. He and those around him understand the political and economic importance of the Great Lakes and other cross-border regions like it. Let's use this knowledge and these relationships to rebuild NAFTA from the ground up.
Thank you.