Canada needs to refocus to compete in post-recession global trade, says Conference Board
Ottawa, ON -- An upward trend in trade numbers in recent months does not automatically add up to a successful ...
Ottawa, ON — An upward trend in trade numbers in recent months does not automatically add up to a successful Canadian trade performance. Future success depends on two things: recognizing our current realities and doing much more to be truly competitive in a tough international marketplace, according to a Conference Board of Canada report, Some Plain Talk About Canada’s International Trade.
“For a country that considers itself a major trading nation, the trend lines for Canadian trade are uncomfortable. Canada’s trade in real terms has been flat over the past decade,” said Glen Hodgson, senior vice-president and chief economist. “International trade is a tough business at the best of times, and it is about to get tougher. While Canada has some clear areas of strength in global trade, it is also up against exceptionally fierce competitors and can no longer rely on a weak dollar or proximity to the US market. The answer is to re-focus our trade policy efforts.”
Canada’s trade is starting to register modest growth after total exports fell by 14% in 2009. Nevertheless, real export growth (with inflation removed) had been flat between 2000 – when Canada-US trade and economic integration peaked – and 2007. When the increasingly important area of services trade is included along with goods, only 68% of Canadian exports go to the United States.
Moreover, Canada has been missing out on global opportunities, including: its modest growth in trade with China and other emerging Asian economic powers; its lacklustre performance in the increasingly important services trade, its relatively slow adoption of the ascending international business mode of integrative trade; and its poor showing in climate-friendly goods and services.
There are eight key actions to improve Canada’s international competitiveness. The directions are not new, but more deliberate action is needed on the part of Canadian firms and governments to make Canada truly competitive in the global marketplace.
– Adjust to a strong dollar – improve productivity and internationalize firm operations;
– Adopt an integrative trade mentality – expand into value chains and services trade, and recognize the positive effects of both foreign direct investment and imports;
– Focus on innovation – increase investment in innovation and encourage a culture of innovation, risk-taking and entrepreneurship;
– Strengthen Canadian competitiveness in the United States (and continue efforts to streamline the border) – focus on harmonizing domestic regulations with US and appropriate international standards;
– Consider diversification and adjustment – adopt a China/emerging Asia strategy
– Develop strong, more forward-looking trade – strengthen Canada’s stature in the World Trade Organization, in part by being willing to negotiate on the issue of dairy supply management;
– Remove obstacles to competitiveness within the Canadian economy – reduce excessive regulation, internal barriers to trade and shortcomings in the workforce; and
– Strengthen the building blocks of a competitive Canadian economy – invest in infrastructure and transportation, and retool immigration policies to attract entrepreneurial talent.
The publication, authored by trade and economic policy expert Anne Park Shannon, is produced for The Conference Board of Canada’s International Trade and Investment Centre. The centre is intended to help Canadian leaders better understand what global economic dynamics – such as global and regional supply chains, domestic barriers to trade, US policies, or tighter border security – could mean for public policies and business strategies.
For more information, visit http://www.conferenceboard.ca.