Vive Le Canada

Despite Canada's growing involvement in global supply chains, weak links remain
Date: Thursday, March 01 2007

OTTAWA, March 1 /CNW Telbec/ - Canadian companies have increased their
involvement in global and regional supply chains since 1990, but still may not
be taking full advantage of the opportunities that global supply chains
present, according to a Conference Board study released today that uses a new
approach to go beyond what trade statistics show.

"To enable businesses to seize the benefits of global supply chains and
for Canada to reap higher living standards, policy-makers need to remove
remaining trade and investment barriers," said Danielle Goldfarb, Principal
Research Associate. "And Canadian businesses need to constantly reassess their
business activities to determine where they can be carried out most
efficiently, so they are able to compete globally."

Companies are increasingly breaking production into smaller parts, making
or buying each part where it is produced most efficiently. This study,
Canada's Changing Role in Global Supply Chains, shows how Canadian goods trade
fits into this picture of production aligned along global or regional, rather
than strictly national, supply chains. Despite more trade in parts, most
studies examine trade as if it were all in final goods. This analysis is the
first to break down Canada's trade based on how it is used in the buyer's
supply chain.

After the Canada-U.S. free trade agreement eliminated tariffs, Canadian
plants became more specialized. This led to a dramatic growth in Canada-U.S.
trade in parts during the 1990s. But this study found that between 2000 and
2005, Canada-U.S. parts trade stagnated; this could signal either that few
gains remain to be made, or conversely, that non-tariff barriers stand in the
way of business opportunities.

By contrast, Canada's trade in parts with other major economies,
especially developing countries such as China and Mexico, continued to grow
quickly between 2000 and 2005-although the trade volumes are currently low.
For example, the use of Chinese components in Canadian supply chains grew
significantly. This may mean that Canadian companies are more likely to gain
future efficiencies from trade in parts from countries other than the United

This article comes from Vive Le Canada

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