Canadian Trade Patterns

Canadian Trade Patterns In order to understand the magnitude and scope of international transactions, we need to clarify further the terminology of trade Goods that are grown, extracted, or manufactured in one country and sold to another form part of the global merchandise trade Also referred to as visible trade because of the tangible nature of the goods The exchange of service, tourism, investment incomes, and other transfers of funds is known as non-merchandise (or invisible) trade Consists of money flows often without tangible products flowing in return More difficult to document and measure statistically due to its intangible nature

Canadian Trade Patterns On a global scale, the volume and value of imports must always equal the volume and value of exports One country’s imports are, automatically, another country’s exports The difference between the value of merchandise exports and merchandise imports is called the balance of merchandise trade Will not necessarily be at equilibrium at any given time for individual nations A nation is said to have a favourable balance when the value of exports is greater than the value of imports A nation is said to have an unfavourable balance when imports exceed exports

Canadian Trade Patterns Most years, the Canadian economy generates a favourable balance of merchandise trade However, Canada’s non-merchandise trade typically generates a negative balance Driven by interest and dividend payments made to foreign investors, this deficit has been increasing steadily in recent years The Canadian economy is extremely dependent on foreign capital to support domestic industrial activity and to carry the large public/government debt In 2000, export of travel, transportation, commercial, government, and financial service totaled %58 billion while imports of these services totaled $64 billion

Canadian Trade Patterns

Canadian Trade Patterns If we study the major categories of Canada’s merchandise imports and exports for 2000, we can see that almost 50% of our exports are natural resources Forest products (primarily newsprint, wood pulp, and lumber) and industrial materials (including chemicals, fertilizer, iron, steel, aluminum, nickel, copper, and precious metals) account for 25% of total exports Energy materials (primarily natural gas and petroleum) and food products (including wheat and fish) make up the remaining portion of the resource products group The remaining 50% of our export business is primarily made up of manufactured goods, such as motor vehicles and parts, aircraft and parts, communications and electronic equipment, and industrial machinery

Canadian Trade Patterns The majority of our merchandise imports are manufactured goods Industrial materials, food products, and energy accounted for less than one-third of our merchandise imports Critics have argued that Canadians tend to sell the world inexpensive, semi- processed natural resources, then buy back these resources once they’ve been processed into final goods by workers in foreign economies It is claimed domestic jobs are lost because of this practice It is also claimed that we are risking our future by exporting large quantities of finite natural resources each year This pattern has been improving In 2000, almost 50% of Canadian merchandise exports were resource products In 1990, it was 68%