Canadian Exports To Countries Other Than US Increased 17% Last Year

Posted on Tuesday, April 08 at 12:34 by N Say
Monday, April 7, 2008

International merchandise trade: Annual review


Canada diversified its portfolio in merchandise trade with the world even further last year, as exports to countries other than the United States advanced, largely on the strength of growing trade with the United Kingdom, Norway and China.

A new analysis of international trade patterns shows that exports to countries other than the United States have grown considerably over the past five years, up 17.4% in 2007 alone. As a result, these countries as a group represented more than one-fifth of Canada's export market in 2007.

Exports to China were responsible for nearly one-fifth of the total growth in Canada's exports in 2007. This most recent surge elevated China to the position of Canada's third largest export market, replacing Japan. Wood pulp, metals, and organic chemicals were among the leading exports to China.

Companies in Canada dramatically increased shipments to Europe as well, bringing exports to $41.7 billion. These increases were primarily due to large gains in exports to United Kingdom, Norway and the Netherlands. Increased exports of nickel were spread across the three countries, while the United Kingdom and the Netherlands were the leading European destinations for Canadian inorganic chemicals.

The United States remained the largest export destination, followed by the United Kingdom.

Imports from countries other than the United States as a group have also been on the rise. They represented over 45% of Canada's total imports last year, the result of growth in shipments from China and Mexico. High-tech products such as computers and telecommunication and related equipment dominated imports from China. Imports from Mexico were powered by increasing levels of telecommunications equipment and motor vehicle parts.

Trade surplus falls to lowest value in eight years

In total, Canada's merchandise imports and exports reached record highs in 2007 in the wake of the rapid appreciation of the dollar, the housing slowdown in the United States, and rising energy prices spurred by the soaring price of crude oil. Merchandise exports increased 2.1% to $465.2 billion, while imports rose 2.8% to $415.8 billion.

As a result, Canada's annual merchandise trade surplus with the world fell to $49.5 billion, its lowest level since 1999.

The energy sector made the largest contribution to the overall trade surplus. In fact, if this sector's influence were removed, Canada would be in a trade deficit position with the world. This held true in 2006 as well.

By contrast, automotive products slipped into a trade deficit position for the first time since 1987, amid widespread declines in exports of all three automotive subgroups, while imports remained virtually unchanged.

Exports of forestry, automotive products decline

The 2.1% increase in total merchandise exports reflected increases in both volumes (+1.1%) and prices (+1.0%).

Most sectors contributed to the increase, with industrial goods leading the way. Rising exports in this sector were boosted by the continued strength of metal ores and alloys, largely due to increased prices.

Exports of energy products increased 5.6% in 2007, reaching $91.6 billion. Although the United States was still the biggest consumer of Canada's energy products, new demand for crude oil from China and Singapore boosted Canada's energy exports to Asia.

Forestry and automotive products were the only sectors that recorded declines. The largest drop in terms of value was in automotive products, as declining demand for passenger autos and trucks in the United States dampened exports to this destination.

Forestry exports have been on the decline for the past few years, particularly lumber and sawmill products. The sector faced numerous challenges in 2007, including the strong Canadian dollar, a depressed United States housing market and the adjustment to the new Softwood Lumber Agreement.

Widespread gains in all import sectors

Imports recorded widespread gains across all sectors. Record import volumes drove the growth in value as import prices fell.

Consumer goods led the gain in imports in terms of value, reflecting strong demand for items such as pharmaceutical products, toys, clothing and house furnishings.

Energy products gained ground for the fifth straight year, reaching $36.6 billion. The price of crude petroleum soared throughout 2007, hitting a record $99 per barrel in November. Crude petroleum continued to flow into refineries across Canada, with imports hitting a record high of $23.7 billion.

Agricultural and fishing products reached a record high, while greater demand for energy products and machinery and equipment boosted imports in these sectors.

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