NAFTA

The North America market is one of the richest in the world. Measured in terms
of GDP, it is the equivalent of Western Europe. But with a somewhat smaller
population, GDP per capita in North America, Canada, Mexico and the U.S., is
around 12 percent higher than in Western Europe. The North American Free Trade
Agreement (NAFTA), which came into effect January 1, 1994, sets out the schedule
for tariff elimination for members.. As a small country, Canada has always been
careful in it\'s dealings it\'s large neighbor, the U.S., however, compliance to
this agreement threatens our very existence. Canada was unfairly taken advantage
of in the singing of this agreement, our identity of a sovereign nation is at
risk.

The North American market is also one of the most sophisticated and demanding.
It is an excellent base from which to develop and launch new products. From a
Canadian base, companies can establish a solid market position throughout North
America and then reach out to serve global markets. This agreement, which and
contains many key provisions to facilitate the conduct of business among the
three countries, has been a benefit to Canada-U.S.-Mexico trade. The continent-
wide transportation system that binds this market together is efficient and
cost-effective. Carriers of all modes are investing in more sophisticated
technology and entering into strategic alliances to improve service. Border
crossings are becoming easier.

Canada provides an ideal location for serving the entire North American market.
Companies based in Canada have preferred access to a market of 380 million
people, with a combined Gross Domestic Product (GDP) of more than $10 trillion
(Canadian dollars). However, our participation in the agreement allows the U.S.
unobstructed to our market. This poses a serious problem when looking at pure
numbers. Canada is a country of approximately 28,000,000 people and the U.S. a
country of about 280,000,000. The extra "0" means the U.S. in ten times greater
then Canada in population size. The implications of this are enormous.

Because of the difference in size it is logical to assume that the average
Canadian firm is about ten times smaller then its U.S. counterpart. As an
example, Bell Canada (Canada\'s major telecommunications company) is worth an
estimated 9 billion dollars. AT&T (U.S. major telecommunications company) is
worth approximately 108 billion. These numbers should speak for them selves.
Although it hasn\'t happened yet, AT&T could attempt a competition war on Bell
Canada

There are many ways to view North American markets. Initially, they can be
viewed as three national markets, with certain differentiating characteristics
in terms of tastes, preferences, disposable incomes and spending patterns.
Because national accounts are the source of much of the general information on
domestic markets, this is often how North American markets are portrayed.

In fact, though, North America is increasingly a collection of regional markets
that cut across national boundaries. Companies based in east-central Canada view
the north-eastern U.S. states as their proximate market area, and companies in
Vancouver, for example, look southward to the U.S. states of Washington, Oregon
and California for market opportunities. Although east-west transportation
routes are well developed and national characteristics of markets are still
important, there is no escaping the geographic pull of the north-south axis.

Increasingly, North America will be viewed as a single market. The market
opportunities for products and services produced by a Canadian-based company are
as likely to be in Chicago, Houston, and Mexico City, as in Canadian cities.

Thus, although some general characteristics of the three national markets are
highlighted here, potential investors should also be attuned to the many cross-
border regional markets that constitute the North American market, and to the
fact that North America is in many ways a single market.

Canada

Although many investors see Canada as an excellent base from which to export to
North American and other global markets, the rich domestic market holds numerous
growth opportunities as well.

Canada\'s population, which is increasing at a little over 1 percent annually, is
fast approaching 30 million. The two central provinces of Ontario and Quebec
account for over 60 percent of the total, but the western provinces of British
Columbia and Alberta, with 22 percent, have the highest population growth.

The majority of Canadians live in urban centres located within 100 kilometres of
the U.S. border. This creates a string of regional market clusters along the
Canada-U.S. border that can be served from a Canadian location. Even on their
own, though, several Canadian cities located close to the Canada-U.S. border are
large markets. The Toronto metropolitan area has a population of 4 million,
Montreal has more than 3 million, and Vancouver has just under 2 million.

The average family