Canada’s Foreign Trade


The trade balance of goods is the amount of exports minus the amount of imports.  A positive trade balance means a trade surplus; a negative trade balance means a trade deficit.  Between 1970 and 2008 Canada recorded trade surpluses every year, but since 2009 Canada has trade deficits, with an exception of years 2011 and 2014.  In other words, Canada buys more than it sells.  Overall, Canada incurred a $6.6 billion trade deficit during 2019, with trade deficits in both goods and services.  The largest trade deficits by country were recorded with China, Mexico, Germany, Italy, and Vietnam while the biggest trade surpluses were recorded with the US, the UK, HK (China), the UAE, and Norway.

Canada is a trading country, and our prosperity as a nation and people is tied to international trade.  However, the Canadian government and Canadians should recognize that our country’s foreign trade policy and practices must be advantageous foremost to Canada and Canadians.  Below are seven thoughts as to what Canada’s trade policy should accomplish.

  • First, Canada should diversify its trade, as about 15 countries account for over 90% of Canada’s trade. Especially, Canada should decrease its dependence on trade with the United States.  Trade with the USA, in terms of the percentage of trade exports should be reduced from about 75% of total goods exported to the range of 50% to 60% of total goods exported.  This would give Canada greater economic and political independence from the United States, increasing the capability of our government to make decisions that are primarily in Canada’s best interest.
  • Second, Canada should be willing to sacrifice some trade with China if China mistreats its or our citizens. Our trade with People’s Republic of China (PR China) accounts for about 4% of exported goods, which means that Canada does not need to kowtow to the communist regime there.  As PR China is unafraid to use trade sanctions and restrictions for political purposes, perhaps Canada should do the same.  Canada should also consider itself free to establish closer trade ties with Taiwan, perhaps leading to free trade with respect to some commodities, e.g., the import of Taiwanese tropical fruits.
  • Third, Canada should diversify its sources of supply to ensure that the international supply chain of goods e.g., semiconductors, needed by domestic industries are not severely disrupted by war, interruptions in foreign manufacturing or international transportation (due to pandemics, labour disruptions, etc.), or trade disputes.
  • Fourth, Canada should double its amount of trade with Commonwealth countries within the next 5 to 7 years. The Canadian government should develop new mechanisms for this to be accomplished, and encourage Canadian companies to take advantage of the arrangements under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in which five other Commonwealth nations participate.  Our trade with the United Kingdom should also be increased strengthening ties between the two countries.  Increasing Canada’s trade with Commonwealth nations would increase Canada’s standing in that organization, thereby potentially enhancing our international political influence and opportunities for multilateral cooperation.
  • Fifth, Canada should develop country-specific strategies to strengthen its overall position in international trade. You do not have to be a great businessperson to understand that if you buy more goods than you sell, your business will not prosper.  Specifically, Canada needs to reduce and possibly eliminate its large trade deficit with PR China, which is Canada’s greatest trade deficit with any country.  The Canadian government also needs to address the competitive disadvantage it has with PR China and the outflow of Canadian money to that country.
  • Sixth, trade policy should never override food security. Canada should ensure it does not rely on any country for food to feed its people.
  • Seventh, the Canadian government and business community should recognize that there are limits to free trade, and that unlimited free trade may not be in our country’s best interest. Canada needs to manufacture items important to its domestic security, including certain vaccines, medical supplies, protective gear, military hardware, and agricultural equipment.  The government also needs to protect our financial institutions and industries from corporate and industrial espionage, that occurs when foreign countries and companies practice unfair trade practices.

Trade policy must complement foreign policy, and vice versa.   Trade policy must also be aligned with policies concerning industrial and fiscal growth, domestic food production and distribution, and national security.   Media must report on trade issues with this in mind, thereby focussing on what is in the best interest of Canada and Canadians.  Finally, governments must be held accountable for trade deficits and trade policies.  Canadians need to consider a party’s or candidate’s statements on trade when elections are held.

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