Taking trade to the next level
An RBC provincial outlook offers a note of interest. The western provinces that suffered the most during the recession are projected to grow the fastest in 2010, which is a good omen for Alberta. The recession caused its economy to contract for the first time since 1986. Exports took a major hit, declining 42% over the year, but an Export Development Canada (EDC) report sees Alberta experiencing the second strongest rebound with 16% growth this year.
Canadian exports are forecast to rise 11% and 7.6% in 2011, but peeking behind the trade numbers reveals all is not as well as it should be, according to the Conference Board of Canada.
It contends Canada’s trade in real terms has been flat over the past decade, and that future success depends on doing much more to be truly competitive in a tough international marketplace.
We certainly have been missing out on opportunities in China and other Asian countries but other sins noted by the Conference Board include: a lacklustre performance in the increasingly important services trade; relatively slow adoption of the ascending international business mode of integrative trade; and a poor showing in climate-friendly goods and services.
The report calls for more deliberate action in a number of areas including adapting to a higher dollar, being more competitive, removing competitive obstacles and significantly, diversifying trade.
Canada is presently negotiating a free trade deal with the European Union (EU), which is inciting the usual protectionist rhetoric about loss of sovereignty, industry and jobs.
These are the same concerns expressed during free trade and NAFTA negotiations in the latter 1980s and early 1990s. For the record, bilateral trade increased 52% with the US. Employment has showed steady gains over the years, rising from 14.9 million jobs to 15.7 million by the early 2000s, and manufacturing managed to hold steady throughout this onslaught of prosperity.
Currently 87% of our exports go to the US, while a paltry 4.7% go to the EU, a marketplace that is similar to our own in many ways and consists of 27 countries, 500 million people and $19 trillion in gross national product.
Although Canada’s trade relationship with the US has been lucrative, the events of the past year have demonstrated the folly of placing too many of our market-board protected eggs in one basket. Exports to the US plummeted last year by 35% and America’s ongoing domestic and international difficulties make Canada’s diversification of trade all the more necessary and urgent.