Our Trade Odyssey: Part III

Where Do We Go From Here? 

As we finally move in a more determined manner to eliminate internal trade barriers between provinces – a long overdue development - opportunities for business in other markets beyond the US deserve our immediate attention.

We are a trade dependent nation. Trade beyond our border accounts for more than two thirds of our Gross Domestic Product.  In fact, we are the second most trade reliant country among the G7; only Germany ranks higher. There is no question that our economic survival is closely tied to trade. However, our dependency on the US creates a vulnerability that is now clearly in focus. Approximately 75% of our trade (depending on what is counted) is with the United States - for reasons that have already been mentioned in previous posts. Our trade volumes to other nations that follow, pale in comparison to what crosses into our neighbour immediately south.

-          The USA accounts for over $450 billion and 75% of our exports including vehicles, oil, machinery and wood;

-          China accounts for approximately $28 billion and 4.6% of our exports of wood pulp, mineral fuels, cereals and machinery;

-          The United Kingdom accounts for about $18 billion or 3% of our exports in gold, aircraft, machinery and mineral fuels;

-          Trade with Japan amounts to $13 billion 2% of our exports in mineral fuels, wheat, ores and wood products;

-          Mexican trade totaled $9 billion or 1.5% of our exports including vehicles, machinery, electrical equipment, plastics and fuels. (https://pangea-network.com/canadas-top-trading-partners-export-and-import/)

This massive gap in our trade profile and overwhelming dependency cannot and should not continue. Other than geography and long established supply chains with the US, we are running out of excuses for trading goods and services that are export viable, to other markets.

If we intend to diversify our trade, we can and must look first to the trade and investment arrangements we have with countries other than the US as a starting point.

The Canadian Government currently has 15 Free Trade Agreements (FTAs) agreements negotiated and in force with 51 countries accounting for 63% of the world's GDP. 

Some examples of in force and accessible FTAs are as follows:

Canada-Chile Free Trade Agreement (CCFTA), Canada-Colombia Free Trade Agreement, Canada-Costa Rica FTA, Canada-European Union Comprehensive Economic and Trade Agreement (CETA), Canada -Honduras FTA, Canada-Ukraine Free Trade Agreement (CUFTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which includes Australia, Singapore, Vietnam and Malaysia among others.  We also have FTAs with Jordan, Israel, Peru, the Republic of Korea.

The CETA agreement, signed in 2017 with the European Union, which still requires ratification by some EU members, nevertheless remains accessible to Canadian businesses who wish to avail themselves of access to the majority of countries in the bloc.

The European Free Trade Association, which consists of countries outside the EU(but linked by other agreements) such as Iceland, Liechtenstein, Norway andSwitzerland eliminate tariffs on a range of goods and opens the door to furthernegotiations on service trade, investment and intellectual property.

Negotiations are in process (and have been ongoing for several years) with the United Kingdom, Japan, Thailand, the Caribbean nations (CARICOM) as well as the South American nations of MERCOSUR - Argentina, Brazil, Paraguay and Uruguay. India has been on the books since 2010 with no resolution.

The paralysis that hinders the “ongoing” negotiations in the above noted agreements must be either accelerated with urgency for shelved for good. MERCOSUR for example has been in this state since 2018. Trade with this group of countries offers access to collective GDP of $2.5 trillion (CDN) and a population of almost 300 million. This is an FTA to be salvaged. Japan is another example of a market worthy of more effort to close a deal – and India should remain a high priority. Resources to finalize agreements in these areas should become the first order of business for the Government of Canada – and the stalemates should cease.

Trade with our long-time partner the United Kingdom is another matter. The “Continuity” FTA we have with the UK (2021) is like the agreement we have with the EU and is a bridge to complete the Canada-United Kingdom FTA still in process. The ongoing negotiation with this arrangement also needs to be finalized.

There are also over 50 Foreign Investment agreements that are in various stages of negotiation or have completed negotiation and require ratification to put them into force.  These investment agreements pave the way for foreign direct investment both ways which contribute to Gross National Product as well as business and potential profits for Canadian firms. 

https://international.canada.ca/en/global-affairs/services/trade/agreements-negotiations/investment-agreements.

A full listing of all the various permutations of trade and investment agreements can be found at: https://en.wikipedia.org/wiki/Free_trade_agreements_of_Canada 1.

With the doors opened to these countries and the assistance that is available for prospective exporters (as outlined in previous postings) there is no shortage of opportunities for Canadian companies to explore.

In addition, with the issues we now face with our major trading partner, the Canadian Government needs to redouble their efforts to conclude and put into force the trade and investment agreements still under negotiation. Businesses need clarity and certainty in order to navigate the laws and requirements of a foreign market and FTAs provide that clarity.

Finally, our special relationship with the 56 Commonwealth countries as well as the 88 members of the Francophonie, which include nations in Africa, Asia and the Pacific, offer the prospect of trade well beyond the agreements that have yet to be realized. We must expand on our relationships with these countries to include trade and investment initiatives.

Moreover, the relationships we can develop with these countries extend beyond trade and investment and add diplomatic leverage to thwart the unwelcome advances and competition from states who do not abide by accepted international trading practices and legal norms.

1. Please note that Wikipedia sources can contain errors. A cross reference with Government of Canada sites however confirm that the information contained in this link is essentially correct.