League of the Overshadowed

Posted By: Joseph Shupac

In the realm of economics, there are three very large countries which, while not exactly overlooked, nevertheless tend to be overshadowed by their even larger neighbours, the United States and China. These three overshadowed countries are Japan, Canada, and Mexico.

Japan is the third largest economy in the world. Canada is the tenth largest economy in the world and the second largest landmass. And Mexico is the only country, apart from the U.S. or the BRIC states, to be among the top fifteen in the world in economic size, population, and landmass.

Currently, trade between Canada, Mexico, and Japan is quite small. Neither Canada nor Mexico are included among Japan’s top fifteen trade partners. And while Mexico and Canada do considerable trade with one another — Mexico recently overtook Britain to become Canada’s third biggest trade partner — Mexico accounts for less than three percent of Canada’s total trade. Their trade with one another is greatly eclipsed by their trade with the U.S.. Indeed, California alone trades more with Canada, Mexico, and Japan than they do with one another.

The current U.S. administration, however, is creating uncertainty for its trade relationships with Canada, Mexico, and Japan. President Trump’s first executive order was to withdraw from the Trans-Pacific Trade Partnership (TPP), in which Japan would have accounted for over 60 percent of the twelve member-states’ GDP, apart from the U.S. itself. Trump has also signaled his intention to tighten the U.S.-Mexico border and reduce legal and illegal immigration into the U.S.. Additionally, he has triggered a renegotiation of NAFTA to remedy what he has called the “worst trade deal the U.S. has ever signed”.

These actions could have the effect of driving U.S. trade partners closer together. Canada and Mexico have an interest in showing that they can trade with one another regardless of what the U.S. government intends to say or do about NAFTA. Canadian cities would also become the obvious destination for Latin American emigrants, in the event that the U.S. government follows through on its recently announced plan to reduce legal immigration while prioritizing immigrants with English-language proficiency.

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