7 Reasons Why Canada’s Imports and Exports Are Booming
Canada is a major player in the global trade market, with a total trade value of over $793 billion in 2020. Despite the challenges posed by the COVID-19 pandemic, Canada’s imports and exports have shown remarkable resilience and growth. Here are seven reasons why Canada’s trade activity is booming and what it means for the future.
1. Canada has a diversified trade portfolio
Canada exports and imports a wide range of products, from natural resources to manufactured goods to services. According to the World Bank, Canada exported 4,359 products to 223 countries and imported 4,534 products from 222 countries in 2020. This diversification helps Canada reduce its dependence on any single market or product and mitigate the risks of trade shocks.
2. Canada has strong trade relationships with its neighbours
Canada’s largest trading partner is the United States, accounting for 75% of its exports and 64% of its imports in 2020. Canada also has a strong trade relationship with Mexico, as part of the North American Free Trade Agreement (NAFTA) and its successor, the United States-Mexico-Canada Agreement (USMCA). These agreements facilitate the free flow of goods and services across the continent and create opportunities for cross-border investment and cooperation.
3. Canada has access to emerging markets and regions
Canada is not only focused on its traditional partners, but also on expanding its trade ties with emerging markets and regions, such as China, Japan, India, Southeast Asia, Europe, and Africa. Canada has signed several free trade agreements (FTAs) with these countries and regions, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Comprehensive Economic and Trade Agreement (CETA), and the Canada-Africa Trade and Investment Agreement (CATIA). These FTAs lower tariffs and non-tariff barriers, open new markets, and create a level playing field for Canadian businesses.
4. Canada has a competitive edge in innovation and technology
Canada is a leader in innovation and technology, especially in sectors such as clean energy, biotechnology, aerospace, information and communication technology, artificial intelligence, and digital media. Canada invests heavily in research and development (R&D), education, and infrastructure to support its innovation ecosystem. Canada also attracts talent and capital from around the world, thanks to its favourable immigration policies, tax incentives, and business environment.
5. Canada has a reputation for quality and sustainability
Canada is known for producing high-quality goods and services that meet the standards and expectations of global consumers. Canada also adheres to high environmental, social, and governance (ESG) criteria in its trade practices, ensuring that its trade activity is sustainable and responsible. Canada supports initiatives such as the Paris Agreement on climate change, the United Nations Sustainable Development Goals (SDGs), and the Extractive Industries Transparency Initiative (EITI) to promote green growth, social justice, and transparency in its trade sector.
6. Canada has a supportive government and policy framework
Canada’s government and policy framework are conducive to trade development and expansion. The government provides various programs and services to assist Canadian businesses in accessing foreign markets, such as Export Development Canada (EDC), the Canadian Trade Commissioner Service (TCS), the Business Development Bank of Canada (BDC), and the CanExport program. The government also engages in regular dialogue and consultation with stakeholders, such as industry associations, chambers of commerce, labour unions, civil society groups, and academia, to ensure that its trade policies reflect the interests and needs of Canadians.
7. Canada has a positive outlook for trade recovery and growth
Despite the uncertainties and disruptions caused by the COVID-19 pandemic, Canada’s trade sector has shown remarkable resilience and adaptability. Canada’s exports and imports rebounded strongly after hitting a low point in April 2020, reaching near pre-pandemic levels by the end of the year. According to Statistics Canada, Canada’s merchandise exports increased by 10.3% from December 2020 to December 2021, while merchandise imports increased by 3.9% over the same period. Canada’s trade sector is expected to continue its recovery and growth in 2022 and beyond, as global demand recovers, vaccination rates increase, travel restrictions ease, supply chains normalize, and new trade opportunities emerge.
Canada’s Trade Performance in 2020
According to the World Bank, Canada had a total export value of US$ 388.4 billion and a total import value of US$ 404.9 billion in 2020, resulting in a negative trade balance of US$ 16.5 billion. Canada’s main trading partner was the United States, accounting for 76.6% of exports and 58.8% of imports. China was the second largest export destination (5.9%) and the largest source of imports (15.7%). Other important trading partners included Japan, the United Kingdom, Mexico, Germany, and Japan.
Canada’s Top Export and Import Products in 2020
The Observatory of Economic Complexity (OEC) provides data on the product composition of Canada’s trade in 2020. The top five export products were crude petroleum (US$ 81.2 billion), cars (US$ 29 billion), petroleum gas (US$ 15 billion), gold (US$ 14.3 billion), and sawn wood (US$ 13.3 billion). These products represented 38.6% of Canada’s total exports. The top five import products were cars (US$ 27.2 billion), motor vehicles; parts and accessories (US$ 14.5 billion), delivery trucks (US$ 14.2 billion), refined petroleum (US$ 12.5 billion), and crude petroleum (US$ 11.9 billion). These products accounted for 20% of Canada’s total imports.
Canada’s Trade Trends and Outlook for 2021
The COVID-19 pandemic had a significant impact on Canada’s trade performance in 2020, as global demand and supply chains were disrupted by lockdowns, travel restrictions, and health measures. According to Statistics Canada, Canada’s merchandise exports declined by 12.3% and imports by 8.6% in 2020 compared to 2019. However, there was a recovery in the second half of the year, as some countries eased their restrictions and economic activity resumed.
The outlook for Canada’s trade in 2021 depends on several factors, such as the pace and effectiveness of vaccination campaigns, the evolution of new variants of the virus, the level of fiscal and monetary stimulus, and the resolution of trade disputes and uncertainties. According to the International Monetary Fund (IMF), global trade volume is expected to grow by 8.1% in 2021, after contracting by 9.6% in 2020. Canada’s trade is projected to follow a similar trend, with exports increasing by 8% and imports by 7.4%, according to the Bank of Canada.
References:
https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-gold.pdf
https://wits.worldbank.org/CountryProfile/en/Country/CAN/Year/LTST/Summarytext
https://oec.world/en/profile/country/can/
https://www.statcan.gc.ca/en/subjects-start/international_trade
https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021
https://www.bankofcanada.ca/wp-content/uploads/2021/01/mpr-2021-01-20.pdf
https://oec.world/en/profile/country/can/
https://borderbuddy.com/blog/canadas-top-imports-exports-and-trading-partners/
https://wits.worldbank.org/CountryProfile/en/Country/CAN/Year/LTST/Summarytext
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