Making a Presentation

Overview of Canadian Trade

Name:

Course:

Tutor:

Date:

Table of Contents

Introduction………………………………………………………………………….3

Overview of economy……………………………………………………………….3

Agriculture…………………………………………………………………………...6

The forest industry…………………………………………………………………..7

Extractive industry…………………………………………………………………..8

Export……………………………………………………………………………….10

Import……………………………………………………………………………….13

Conclusion…………………………………………………………………………..15

Introduction

Canada is considered as one of the most successful states in the world. The country is a participant of the Organization for Economic Cooperation and Development and a member of the Big Eight. The country is one of the leading trading states in the world. Canada ranks sixth in the world in terms of turnover of foreign trade. Canada has a market economy with a slightly greater state intervention than in the United States, but much less than in most European countries.

Overview of economy

Canada is a trading country. Its exports exceed 200 milliard dollars, while imports had passed for 150 milliard dollars (Kippen, 2014). The geographical position of Canada had determined the orientation of its foreign trade in two countries: the United States as a market for raw materials and semi-finished products, and the UK as a major consumer of agricultural products and certain types of industrial raw materials. It should be noted that 70-80% of Canadian trade is with the United States. In its foreign trade activities Canada is based on the General Agreement on Tariffs and Trade (GATT). 25% of goods produced in Canada is exported, and in industries such as pulp-paper industry, lumbering and the aluminum industry, the export volume of more than half the volume of production. Canada ranks first in the United States imports. The importation into the United States many Canadian goods is produced by special bilateral agreements on free trade, and some kinds of raw materials and fuel are exported from Canada to the US is limited by quotas. The adoption of the Canadian-American Free Trade Agreement (1989) made it possible to eliminate barriers to trade between the two countries and to develop a bilateral mechanism for the settlement of disputes (McDougall, 2006). Any party that has some claims may bring them to one of the trade tribunals. In addition, the North American Agreement on Trade between the United States, Canada and Mexico increased the possibility of entrepreneurs and has created a single market with a number of consumers in 360 million people and the economic space, which is estimated in the trillions of dollars. Besides the United States, Canada is developing trade with other partners, especially the countries of the Common Market, China and Japan.

Canada has always had a lower level of gross domestic product (GDP) per capita than in its neighbor to the south, however higher than in the industrialized countries of Western Europe. Since the 1990s, thanks to the reform conducted by the State and management of the state that coming from the principle of economic liberalism, the public debt varies from 68.4% of GDP in 1994 to 38.7% - in 2004 due to the "series" of budget surpluses. The last ten years, after a period of economic recovery, the Canadian economy is growing rapidly with low unemployment and a large surplus of the federal budget. The share of federal government spending in GDP went from 19 to 12%, total government spending declined by about 10%. In January 2013, the state unemployment rate was the lowest since 1974 amounting to 5.8% and provincial unemployment rates ranged from 3.2% to 12.2% (Kippen, 2014).

The impressive growth of the manufacturing and mining sectors as well as service sectors has transformed almost completely agrarian state into a predominantly industrial with a predominance of the urban population (Baldwin & Hanel, 2003). Service industry, which employs millions Canadians prevails in the Canadian economy as in other advanced industrialized countries. However, Canada differs from the other industrialized countries with an important position of the mining industry in its economy, in particular, its oil industry and forestry.

Canada is an active supplier of energy. In Canada, there are gas fields on the east coast and large oil and gas reserves, occurring mainly in Alberta, British Columbia and Saskatchewan. Canada ranks eighth among oil-producing countries due to the large spaces of Bitumen in Athabasca. Rich sources of cheap renewable hydropower are in British Columbia, Manitoba, Ontario, Quebec, Newfoundland and Labrador (Kippen, 2014).

The country is one of the world's most important suppliers of agricultural products, mainly due to the western provinces-the largest suppliers of wheat and cereals, coordinated by the Canadian Wheat Board. Canada is the world's second largest diamond producer, is the largest producer of zinc and is a leader in the manufacturing of many other natural resources such as nickel, aluminum, gold and lead. Canada also has a significant industrial sector, concentrated mainly in southern Ontario, where there are a number of car assembly plants, carrying out orders of American automotive giants, and in Quebec, with its aerospace complex (Kippen, 2014). The country occupies a leading positions in telecommunications, biotechnology and pharmaceutical industries.

Canada is heavily dependent on international trade, especially on trade with the United States, in part due to the development extractive industries. The North American Free Trade Agreement has caused a spectacular increase in trade and economic integration of Canada and the US. Having experienced a slowdown in economic growth in 2001, which was not considered through the technical point of view as a decline because lasted less than six months, Canada did not have any recession since 1991 and has a better overall economic performance of the G-8 (McDougall, 2006). A large contribution to the economy is making automotive industry, as well as advanced production of the machinery and equipment. The Canadian economy has a strong export orientation, the share of exports in GDP in 2013 – 34.6%. The trade balance is positive-37.5 milliard Canadian dollars. The volume of accumulated foreign direct investment in the Canadian economy in 2013 amounted to 516.3 milliard dollars, and the Canadian direct investment abroad -555.0 milliard dollars (Reynolds, 2008). The line on the full liberalization of trade, and active participation in international and regional integration, in terms of foreign trade, remains a priority.

The reforms in the mid 1980 had been the first steps of the achievement of the current state. The result of the reforms in the Canadian economy has been its general progress and a significant improvement in the public finances. The main achievements of neo-conservative and liberal reformers are the following:

- The deregulation of the economy, large-scale privatization and liberalization of the major extractive industries and infrastructure;

- The elimination of the direct subsidies in agriculture and transport;

- A balanced federal budget and the elimination of the budget deficit in most provinces;

- The reduction of the state apparatus: the number of state employees had been decreased by 40 thousand people;

- The creation of the new progressive sectors of the economy and the expansion of the number of employees in the private sector (Kippen, 2014).

Agriculture

Canada ranks fifth in the world in the collection of grain and is one of the largest producers of wheat. Agriculture has a high level of mechanization, concentration of production and high labor productivity. The country fully meets its domestic demand in the major types of food, and almost half of the production is exported. The country occupies a leading positions in the exporting of agricultural products. The export of grain, primarily wheat, is of particular importance. The vast expanses of fertile land, a variety of climatic conditions favor the development of many branches of agriculture. About 10% of the territory is occupied by the farm. Agriculture of Canada not only meets the needs of the growing population of the country in various food products, but also plays an important role in the foreign trade of the country, giving 11% of the value of total exports (Kippen, 2014). A special place is occupied by the grain exports (about 35-million tons), mainly wheat (about 25-million tons), for the export of which Canada is the second largest in the world after the United States.

The forest industry

Canada accounts for 11-million tons of 50-million tons of global trade. The positions of the top six leading wood exporters on major commodity markets:

Tab. №1 Major Exporters

	Total %	Wood raw materials (place, %)	Lumber (place, %)	Plywood and plate (place, %)	Cellulose (place, %)	Paper and paperboard (place, %)
Canada	20	7; 4	1; 44	4; 7	1; 34	1; 23
USA	13	1; 24	2; 9	2; 8	2; 19	4; 9
Finland	10	17; 1	5; 5	11; 2	4; 7	2; 14
Sweden	9	12; 1	3; 9	16; 1	3; 12	3; 12
Germany	7	4; 7	8; 1	5; 5	16; 1	5; 8
France	4	6; 5	9; 1	6; 5	10; 2	7; 4

Selective Cuttings (2014)

Timber and paper industry uses the rich forest resources. Canada ranks first in the export of lumber and paper. Large timber and paper mills are located in the east of the country as well as in the taiga zone in the north of the Prairie provinces, and especially in British Columbia, where it is concentrated 2/3 sawmilling industry.

Extractive industry

Mining industry stands out among the rest of the Canadian industries with an exceptional variety of branches. Virtually all of the major types of minerals that are necessary for the modern industry is produced in a significant amounts. By the early 1980s in Canada were mining 26 kinds of metals, 24 species of non-metallic minerals and all major mineral fuels. The extraction of oil, natural gas, sulfur and potash is localized in the southern part of the country. Natural gas, oil and coal are widely exported.

Canada is one of the largest producers of aluminum, copper, iron, nickel, gold, uranium and zinc. Saskatchewan uranium reserves are the largest in the world. A variety of minerals in Canada make it one of the world's largest exporters of mining products. However, the two most important mineral resources are oil and natural gas (Kippen, 2014). Alberta has significant reserves of natural resources and is a national leader in their production. There is the significant oil and gas exports to the United States.

Describing the international trade of Canada, it may be noted the critical importance of the foreign economic relations for the development of the country. Canada stands in the first position in terms of involvement in international trade in the Group of Seven (Kippen, 2014). The foreign trade strategy of Canada is built on the country's participation in the process of globalization of the world economy (participation in the Group of Seven, WTO), and the regional development orientation (Opening New Markets, 2014).

Tab. №2 Exports and imports by the major trading partners of Canada

Export	2008	2009	2010	2011	2012	2013
USA	328,9833	350,5763	368,2789	361,4421	355,743	369,8911
China	9,7995	9,8464	10,1728	10,2805	10,027	11,872
United Kingdom	7,6953	9,364	9,3605	11,2849	14,1579	14,2069
European Union	16,4234	17,5338	18,6438	20,9088	24,3805	25,3904
Other countries	23,4664	27,4962	29,2085	33,2268	39,0721	47,4177
Import	2008	2009	2010	2011	2012	2013
USA	240,3563	250,0383	259,3329	265,0202	269,8287	280,7731
China	10,6455	10,0945	11,2131	11,8578	11,9752	11,6694
United Kingdom	9,183	9,46	9,0665	9,5543	10,0172	11,3212
European Union	26,001	27,007	29,4873	32,5706	32,4094	35,3779
Other countries	36,8268	44,2744	54,4559	61,636	65,939	76,4395
Balance	56,412.6	65,848.0	62,372.2	49,605.5	47,898.0	46,868.9
USA	88,627.0	100,538.0	108,946.0	96,421.9	85,914.3	89,118.0
China	-846.0	-248.1	-1,040.3	-1,577.3	-1,948.2	202.6
United Kingdom	-1,487.7	-96.0	294.0	1,730.6	4,140.7	2,885.7
European Union	-9,577.6	-9,473.2	-10,843.5	-11,661.8	-8,028.9	-9,987.5
Other countries	-13,360.4	-16,778.2	-25,247.4	-28,409.2	-26,866.9	-29,021.8

International trade (2014)

The table clearly demonstrates that the United States is the main and the unconditional trading partner of Canada. Canada also develops foreign trade with other partners, in particular with the European Union, the UK and China.

Export

A major role in the export of goods takes energy-26%, which is 125.79 million dollars, manufactured goods-23% - 111.5-million dollars, machinery and equipment-19% - 92,99-million dollars, automotive products-12% - 61.08 million dollars. Despite the fact that Canada ranks first in the export of timber and the second place in the export of wheat, only 8% of all exports are agricultural products, that is 40.85 million dollars.

Tab. №3 Change in the commodity composition of exports from 2009 to 2013

	2009	2010	2011	2012	2013
Exports	429,0058	450,1499	453,7324	463,0514	489,8568
Agricultural and fishing products	30,6745	30,0968	31,2103	34,3703	40,8575
Energy	68,1058	86,9624	86,7889	91,6473	125,7922
Wood	39,4174	36,4478	33,3314	29,2632	25,6592
Industrial goods	77,9533	83,9636	93,9055	104,4209	111,5115
Machinery and equipment	91,1061	93,0051	93,2715	93,4283	92,9944
Automotive Products	90,3887	87,9945	82,2983	77,3044	61,0826
Spare parts for equipment and machinery	17,2674	17,1477	17,8105	18,7367	18,1702
Trade in special operations	7,985	8,2882	8,7324	8,1759	8,1927
Unallocated indicators	6,1076	6,2436	6,3836	5,7044	5,5967

International trade (2014)

As can be seen from the table, the export of goods and services was growing with each passing year. So from 2009 to 2013, it grew by $ 60 million. The average growth rate was 4.5%. The largest growth rate was in 2013 and amounted to 5.7%.

USA is the largest trade partner of Canada. During the period of the Canadian-American Free Trade Agreement the growth of mutual trade is observed almost constantly. The only exception is the period of 2001-2002 due to the economic turmoil that emerged in the United States after September 11. Therefore, foreign economic relations with the United States are extremely important to Canada as the major consumers of Canadian goods and services is the US market. In this regard, it is important to note that Canadian-American Free Trade Agreement has stimulated significant progress in the productivity and specialization of the Canadian economy and helped to improve the scales of the economy, product quality, price competitiveness. The result was the increase in the overall competitiveness of Canadian exports of both goods and services. The main result of this was the boom in the foreign trade of Canada. The volume of the Canadian exports in the period since 1990 has doubled. The export growth rate was 10% per year, on average, four times more than the growth rate of GDP. Moreover, it is important to note that in the mid-1990s, export growth was the main driver of business activity (Baldwin & Hanel, 2003). It allowed Canada together with the United States take the leading position in terms of economic development in the Group of Seven.

For example, in 2011 the share of finished products in the export of Canada was 71%, while imports – 85.7%. In general, over the past period, the share of machinery and equipment had increased from 28% to 45%. Canada exports to the United States: 80% of the cars, about 65% of light industry products, 55% of rubber, 50% of electrical equipment, 50% of the steel and industrial equipment. Canada is also a major supplier of crude oil to the United States, about half of all Canadian oil and gas flows to the United States (Baldwin & Hanel, 2003). As a result of these circumstances, many have noted that after the signing of the Canadian-American Free Trade Agreement, Canada has become more vulnerable, and not sustainable. Moreover, the acceleration and the in-depth economic integration of Canada and the United States raise the question about the future of their political integration, in other words-of the possibility of absorption of Canada by the United States. However, in the foreseeable future, this probably seems unlikely.

China came in second place in terms of imports of goods from Canada. Canadian exports to China had increased in 2013 by 16.4% to 18.5 milliard dollars, accounting for 4.3% of total Canadian exports. The main products which are delivered to the Chinese market are mineral products (14.2%), wood (13.6%), oilseeds (12.8%).

United Kingdom has remained the main trading partner of Canada in the EU. Canadian merchandise exports to the United Kingdom in 2013 had remained at the level of 18.8 milliard dollars. The share of the UK of total Canadian exports is 4.1%. Precious metals, namely gold, diamonds and nickel, are the main export commodities supplied from Canada to the UK, the supply of which in 2013 had amounted to 80.2% of the total supply.

Import

Canadian imports in 2013 increased by 2.4% and amounted to 462.3 milliard dollars. The major role in the structure of imports of Canada has traditionally formed 4 major categories: ground transportation (15.3%), nuclear reactors (14.6%), mineral fuels (11, 1%) and electrical machinery and equipment (9.8%). The United States has traditionally been a leader in terms of supplies to Canada. In 2012, American imports of goods had increased by 13% to 223.3 milliard dollars, accounting for more than 50.6% of the total Canadian imports. The main products were vehicles (19.5%), boilers, nuclear reactors, mechanical and machinery equipment (15.1%), mineral fuels (7.5%), electrical machinery and equipment (6, 4%).

China is the second largest import partner of Canada. In 2013, imports from China had increased by 4.1% to 50.7 milliard dollars, accounting for 11.0% of total imports into Canada. A significant part of the supplies accounts for electrical machinery and equipment (25.3%), boilers and nuclear reactors (20.0%), furniture (5.8%) and toys (5.1%).

Mexico remains an important supplier of products to the Canadian market. In 2013, imports from Mexico had amounted to 25.5 milliard dollars, which is 2.8% more than in 2012. The main imports were also vehicles (28.2%), electrical machinery and equipment (24.1%), boilers and nuclear reactors, mechanical and machinery equipment (14.5%).

Tab. №4 Change in the commodity structure of imports from 2009 to 2013

	2009	2010	2011	2012	2013
Imports	363,1578	387,804	404,2526	415,0057	442,9879
Agricultural and fishing products	21,3987	22,0401	23,4541	25,4962	28,511
Energy	24,7817	33,6688	34,6284	36,5689	53,0719
Wood	3,1718	3,134	3,0839	2,995	2,8693
Industrial goods (metals)	73,5109	78,5784	84,0156	85,1323	91,5738
Machinery and equipment	104,0914	110,9216	114,6557	116,6321	122,6283
Automotive Products	77,3678	78,3837	79,8498	80,002	71,959
Other consumer goods (clothing, footwear)	47,7191	49,488	52,0217	54,7939	57,5223
Trade in special operations	4,9671	4,6496	4,7713	5,1921	6,0007

International trade (2014)

Imports had increased from 363.18 to 442, 98 million dollars that is 60 million dollars from 2009 to 2013. The average growth rate of imports is 5%.

Conclusion

Canada is one of the richest countries with highly developed economy. A distinctive feature of the Canadian economy is that its main trading partner is the United States, accounting for 83% of exports. In my opinion the fact that the United States is a geographical neighbor of Canada contributes to the powerful economic development. Canada is very similar to the United States in regard to its market direction in the economic system, its productive forces and its high standard of living. Rich in natural resources and a highly economically active population, Canada uses a serious economic opportunities that allowed the economy to develop all the time.

References

Baldwin, J., & Hanel, P. (2003). Innovation and knowledge creation in an open economy Canadian industry and international implications. Cambridge, UK: Cambridge University Press.

International trade. (2014). Retrieved October 22, 2014, from

http://www.statcan.gc.ca/pub/12-581-x/2012000/it-ci-eng.htm

Kippen, B. (2014). Canada The True North Strong And Free: A G8 Leader In The 21st Century. FriesenPress.

McDougall, J. (2006). Drifting together: The political economy of Canada-US integration. Peterborough, Ont.: Broadview Press.

Opening New Markets: Trade Negotiations and Agreements. (2014). Retrieved October 23, 2014, from

http://www.international.gc.ca/trade-agreements-accords-commerciaux/index.aspx?lang=eng

Reynolds, M. (2008). Canadian imports and trade issues. New York: Nova Science.

Selective Cuttings. (2014). Retrieved October 23, 2014, from

https://cfs.nrcan.gc.ca/selective-cuttings/54