Should the US and Canada form a "dollar zone"?

[Independent voter]

Right now $1 Canadian buys you 73¢ US.

This is great for American companies who want to take advantage of cheap Canadian labor, or to buy Canadian real estate or businesses, but it's not so great for US companies who compete with Canadian companies like lumber and milk.

Europe got around this by creating a euro zone, should the US and Canada do the same?

I know China is trying to keep their currency high because they don't want money to leave China. Couldn't this be a problem in Canada too? Money leaving Canada because Canadian currency lost value?

Both currencies have the same name so that's a bonus. If memory serves both currencies have similar denominations too.

[Yvaelle]

We have a 'dollar zone' so to speak. Canada and the US are the some of the most integrated economies on the planet. Our economies are more integrated than the EU, despite them sharing a currency.

Having separate currencies allows us greater control over our economies, despite the high degree of integration. There is no real benefit to having a singular currency between Canada and the US, except to eliminate the adverse effect of forex speculation between the USD/CAD, which is sometimes mildly harmful to the economies - but the negative is likely outweighed by the higher degree of currency control.

[Deleted]

We have a 'dollar zone' so to speak. Canada and the US are the some of the most integrated economies on the planet. Our economies are more integrated than the EU, despite them sharing a currency.

I don't know what you're looking at to make this claim. How is integration measured?
For reference, wikipedia has different stages of integration,
https://en.wikipedia.org/wiki/Economic_integration

Preferential trading area
Free trade area
Customs union
Common market
Economic union
Economic and monetary union
Complete economic integration

The US/Canada/Mexico having a "free trade area", and the EU having an "economic union". Some countries within the EU are even more integrated in a monetary union.

[Puupi]

Right now $1 Canadian buys you 73¢ US.

This is great for American companies who want to take advantage of cheap Canadian labor, or to buy Canadian real estate or businesses, but it's not so great for US companies who compete with Canadian companies like lumber and milk.

Relative value by itself is meaningless.

A change in relative value can have effects like you mentioned.

[shrunken]

Hard pass on this. Sorry Canucks.

[Spectral]

I think there are some serious dangers in having a completely shared currency for different governments. Not having the ability to control monetary policy as a lever to respond to economic policy needs requires huge upsides and I'm not seeing them here. This would perhaps work well for the United States, but I don't see the big upside required for Canada.

[XangXu]

I personally think Canada should seek a new trade partner. Any money we make from America is tainted in my opinion.

Close the boarder to.

[Rennadrel]

No, suck it up and deal with the NAFTA trade deals like a good boy. We don't want your shitty hormone injected milk so maybe once you fix your quality problems, we might consider importing again, not to mention you fuckers keep flooding the market and making it impossible for Canadian dairy farmers to compete as our operating costs are a lot higher. You Yanks have been bitching about softwood lumber for decades, no sense continuing to bitch about it because nothing is going to change. We still have the largest quantity of softwood lumber to export, and we don't have to subsidize it, as your dumb fuck of a president seems to be oblivious to.

Not to mention our massive automotive manufacturing export as both a country that is home to two of the largest OEM parts suppliers as well as having several assembly plants, you are getting cars on the cheap while the shit we build is being sold back to us at a significant markup.

[GennGreymane]

I dont want no maple syrup on mah money

[NED funded]

Our small and medium business trade more with Mexico than Canada. So if we were to form a NAU, excluding Canada from it would be benefitial to us. Let me explain the rationale:

- We have a higher leverage with Mexico than Canada, so getting better terms with them is going to be significantly easier.
- Excluding Canada from said Union, would put pressure on Canada to join and accept worse terms than they would normally do.

So, now we have a NAU entirely designed to benefit the US.

[Yvaelle]

I don't know what you're looking at to make this claim. How is integration measured?
For reference, wikipedia has different stages of integration,
https://en.wikipedia.org/wiki/Economic_integration

Preferential trading area
Free trade area
Customs union
Common market
Economic union
Economic and monetary union
Complete economic integration

The US/Canada/Mexico having a "free trade area", and the EU having an "economic union". Some countries within the EU are even more integrated in a monetary union.

The EU is designed to have more institutions to enable future economic integration yes - but the EU is also relatively new and the degree to which they have integrated has not yet surpassed the US/Canada: they might eventually though.

Integration is much easier on Canada and the US because we're only trying to integrate two bordering economies, versus the EU which is trying to integrate 28 countries - some of whom are a good distance apart: it will take a lot longer for trade flows to be established and normalized. Further, the relative level of development is a factor in economic integration, some EU countries have much higher quality of life and disposable income after equivalent services than others. By contrast, Canada and the US have more-or-less the same disposable income after equivalent services: we buy the same products at the ~same prices (adjusting for currency, transport markup, legal/regulatory markup, etc).

Another factor is balance of trade. The US is Canada's top trading partner, and Canada is the US's second largest trading partner (only following China). We do almost $2 billion dollars of bilateral trade per day, over $600 billion per year. And yet, US trade surplus to Canada in 2016 was only $12 billion, or 1.9% - that alone is a good indication that we're not seeing one economy leeching the other. By comparison, consider Germany vs. France in the same year (2016) - these two countries are the largest and likely the most ripe for integration. Germany exported $111 billion to France, and imported $72 billion from France (that's 24% vs 1.9% for Can/USA).

Overall, the Canadian/US economies have closer purchasing power parity, more transport channels than most EU countries, more trade, and more equal trade balance. The EU does have institutions which we do not - which in theory would yield a higher degree of economic integration over the long run, but exactly how long the EU will need to run is anyones guess - it could easily be more than a century from now. That's just too long to assume an economic model stands, both in NA and EU.

[Allybeboba]

The US/Canadian exchange rate fluctuates. Fluctuations are pretty common over the years.

http://cad.fx-exchange.com/usd/excha...s-history.html

[Torto]

Is this based solely on proximity? Because $1 Aussie dollar gets you 75 US cents. So we'd like to get in on that as well.

[Tierbook]

Maybe someday when our president doesn't nix our participation in the TPP.

'member when TPP would destroy America's middle class and Obama was a sell out for trying to get it through? I 'member

[Tierbook]

Pretty sure the same people who said that cheered Trump pulling out of it.

90% of the internet?

[Evil Midnight Bomber]

Hard pass on this. Sorry Canucks.

No need to apologize. We aren't interested, Yank.

[shrunken]

No need to apologize. We aren't interested, Yank.

I thought apologies passed for currency in Canadaland. Man, this trade agreement is confusing.

[Shelly]

It wouldn't make too much sense given that the US dollar is a defacto worldwide currency that bridges the gap between first and third world countries.

Canada - not being a third world country despite the overwhelming number of Sasquatch - wouldn't want to open themselves up to the inflation and counterfeiting problems.

[Torto]

Maybe someday when our president doesn't nix our participation in the TPP.

Trump pulling out of the TPP was one of his more moronic policies. However it looks like we will be getting our own separate trade deal with the US, so it's not a complete disaster for Australia.

[Wyrt]

So that next time the US crashes the economy we can take Canada down with us?