Re-writing the Future of Canada’s Share of Global Trade: Part 1

There’s been a lot of talk about potential opportunities for Canada to liberalize trade and open up markets.

The chance to enhance existing trade flows may give Canada some well-timed incentive to ramp up value-added exports in particular. As the world’s eighth largest exporter of agri-food products, Canada’s well-positioned to grow its share of global trade.

Even though Canada is well positioned, the right choices need to be made. At this critical juncture, things can either pick up or slide backward. Canada is poised to re-write our share of global trade; the only question is what the story will be.

Demand for Canadian exports is up, but so is competition

In 2014, agri-food trade amounted to just over 60 per cent of the world’s ag-related trade. There are many reasons those exports will increase: increasing wealth in emerging market economies will grow the demand for more raw commodities. And as countries continue to develop, the raw commodities they once demanded will give way to even more demand for processed foods and alternative protein sources.

That’s great news for an export-dependent country like Canada. Canadian exports are growing to key markets like China and Japan; but the problem is that so too are the exports of competitors. Canada’s overall share of China’s ag-related imports over the last 10 years has actually diminished as Chinese demand grows.

Are trade deals the answer?

Several presenters at the recent Conference Board of Canada's Food and Drink Summit 2015 suggested Canada will only realize the potential of trade deals by increasing its exports of value-added goods. To rely on exports of raw commodities as a strategy of the future will miss the mark.

Any trade deal the U.S. actually signs means a potential withering of the preferential access we enjoy because of the North American Free Trade Agreement with the U.S. Trade deals can give the U.S., Canada’s largest and wealthiest markets, liberalized access to a wider array of imports, and may serve to diminish Canadians’ market share there. Hence, the need for us to diversify our exports to new markets, especially in exports of manufactured food products.

How do we capitalize on the reality that is growing demand in a liberalized trade environment? In the next blog post, I’ll outline some of the ways Canada can flex its agri-food exporting muscles as global demand grows and borders fade.

Martha Roberts, Economic Research Specialist