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Canada's State of Trade: Trade and Investment Update 2010
V. Key Developments in Canadian Merchandise Trade in 2009
As evidenced by the previous chapter, market conditions in 2009 resulted in a dramatic reduction in Canada’s trade, with most of the impact occurring on the goods side. The weakness in global demand had a double impact. With the global economy in the grip of the biggest downturn in some 80 years, the demand for many Canadian products was down. The labour market and consumer confidence were affected, and Canadian consumers reduced their purchases, which also scaled back Canadian demand for imported products. And with lower production levels in Canada, there was a concomitant reduction in demand for imported inputs into the Canadian production process.
However, as we have also seen, regions and sectors were affected to differing extents. This chapter examines in greater detail the developments in Canada’s merchandise trade in 2009—across trading partners, commodities, and provinces—using Canadian trade statistics that are prepared at the detailed commodity and individual country levels.1
Canadian merchandise exports declined to $359.7 billion in 2009, while merchandise imports fell to $365.2 billion. Much of this trade was concentrated in a small number of countries. The top six countries— the United States, the United Kingdom, Japan, China,Mexico and Germany— accounted for nearly seven of every eight dollars of merchandise exports and six of every eight dollars of merchandise imports in 2009. In terms of top trading partners, China regained third position in the ranking of Canadian export destinations, as Japan moved back to fourth position. India jumped to tenth position from thirteenth while Belgium slipped out of the top ten, falling fromninth to eleventh place. On the import side, Algeria and South Korea exchanged positions, as the former fell three places to tenth spot and the latter moved in the opposite direction. Italy moved into the top ten (at ninth spot) while Norway dropped out of the top ten import sources.
In terms of specific products driving Canada’s trade performance in 2009, other petroleum gases (primarily natural gas) and crude oil accounted for the lion’s share of the decline in both trade levels and in the trade balance. Together, these two products accounted for roughly half the deterioration in the trade balance in 2009. Falling energy prices lay at the heart of the decline, as they retreated fromtheir historical highs recorded a year earlier. However, volumes were also down, reflecting the tough economic climate. On the export side, lower trade with the United States was behind the decline. All of the reductions in crude petroleum and natural gas exports and nearly 70 percent of the decline in non-crude petroleum exports occurred with the United States. For imports, Canada purchased less crude oil from Algeria, the United Kingdom, Norway, and Angola, and less non-crude petroleum from the United States.
The financial difficulties experienced by major North American auto manufacturers and falling demand in the U.S. and Canadian markets curtailed trade in the automotive sector. Passenger vehicles and automotive parts bore the brunt of the declines. At the same time, exports of trucks were more than halved, while imports declined at much lower rates. In addition, imports of piston engines fell at more than twice the rate of exports, reflecting the malaise in the sector.
For non-energy resource products, both prices and volumes fell across most commodities lowering the value of exports for the year. In agriculture, beef exports continued to be hampered by trade restrictions and pork exports experienced headwinds via an association with the swine flu.Wheat was responsible for well over half the decline in cereals exports, with barley, oats, and corn making up the remainder of the decline. Both canola seed and canola oil suffered sizeable cutbacks to their export levels as well.
In minerals and metals, trade is very sensitive to economic conditions. In times of economic booms, trade is very robust, while during a downturn in economic output, the demand for these products is weakened. Thus, trade in these products was heavily impacted by the global, synchronized recession of last year. Exports were down to almost all developed countries, most notably to the United States. Reduced output in the North American automotive sector also contributed to the weakness in this sector. Trade losses were widespread, in particular for aluminum, iron and steel, and nickel products.
In the wood, pulp and paper sector, exports have been on a downward trend for some time. For wood products, the downturn in the U.S. housing sector curtailed exports. For paper products, slumping newspaper circulation and advertising around the world has depressed the market for newsprint. Pulp exports have likewise been affected. Exports to the United States accounted for much of the declines in this sector.
Trade by Top Ten Partners
Canadian merchandise exports to the world fell by 25.6 percent to $359.7 billion in 2009, a decline of $123.9 billion. The share of the United States in total merchandise exports fell by 2.6 percentage points last year, while that of other major trading partners increased, especially China (up 0.9 percentage points) and the United Kingdom (up 0.7 percentage points).
The United States accounted for three quarters of total exports in 2009, down from 77.6 percent in 2008. Exports to the United States were down $105.7 billion last year to $269.8 billion. This was a 28.1 percent decline in exports, the largest relative decline among Canada’s top ten export partners, and was equivalent to over 85 percent of the overall decline in exports to all destinations last year. Weak market conditions and a large correction in commodity prices were key factors behind the decline. Energy products, especially crude oil, down $25.0 billion (37.1 percent), and natural gas, down $18.1 billion (49.8 percent), accounted for the bulk of the decline, while exports of automotive products continued to fall sharply. Exports of passenger automobiles fell $7.9 billion (23.4 percent), while exports of automotive parts were down $3.6 billion (36.2 percent). Exports of trucks fell by over 60 percent for the second consecutive year to $1.4 billion; they are now one-seventh the amount they were just two years ago.
The United Kingdom was next in importance, receiving $12.1 billion (2.7 percent) of Canada’s total exports. Export opportunities in the United Kingdom have been affected by a protracted recession there. After six consecutive quarters of decline, the United Kingdomonly returned to growth in the final quarter of 2009. Nonetheless, Canadian exports to that country fell by only 7.1 percent, or $920 million. It was the second- best performance among the top ten export destinations, behind the gain registered by China. Major declines were concentrated in a few commodities, led by nickel (down $633million), preciousmetals scrap (down $402million), diamonds (down $204 million), radioactive isotopes (down $179 million), non-crude oil (down $124 million), and telephone equipment and parts (down $105 million). Partly offsetting the losses was a $1.0 billion increase in gold.
China reclaimed third position (from Japan) in 2009, as exports increased 6.6 percent to $11.2 billion. Among the top export destinations, China was the only country that registered an increase in exports from Canada. Canola products led the gains as exports of canola seeds advanced by $628 million (80.2 percent) and those for canola oil were up by $127 million (47.1 percent). Energy exports were up sharply, despite the strong price declines noted in the previous chapter. Coal exports almost quadrupled, while crude oil exports almost tripled. Several mineral ores also recorded strong advances, including iron, copper, and zinc. However, nickel (down $208 million), potash (down $414 million), and sulphur (down $662 million) all experienced setbacks in their exports to China.
Japan slipped to fourth spot as Canadian exports to that country were down 25.0 percent to $8.3 billion. Coal suffered the largest setback, falling $483million. This was likely a partial undoing of a situation the previous year whereby Canadian exports profited from a regional supply disruption.2 Nonetheless, Canadian exports of coal to Japan were still 85 percent higher in 2009 then they were in 2007. Canola (seeds) and wheat exports were down by $418 million and $248million, respectively. A number of metals (e.g. aluminum, nickel, and cobalt) and mineral ores (including copper, iron, and molybdenum) also suffered setbacks in exports to Japan last year.
Mexico was Canada’s fifth-largest export destination in 2009. Exports to Mexico were valued at $4.8 billion, down $1.0 billion (17.8 percent) from 2008. Canola seeds experienced the largest decline, at $353 million, followed by various automotive products, which combined for a $261million decline. Other notable declines included a variety of steel products, coal, telephone equipment and parts, and potash. Exports of integrated circuits registered an increase of $231 million in exports last year to partially offset the losses noted above.
Germany ranked sixth in 2009. Exports to Germany fell by $747 million (16.7 percent) to $3.7 billion. Three products accounted for the bulk of the decline: iron ores, down $399 million (46.2 percent); coal, down $176million (60.5 percent); and copper ore, down $166 million (66.4 percent). For themost part, these losses wiped out the gains registered by these products in 2008.
South Korea ranked seventh in 2009, with exports falling $309.5 million (8.1 percent) to $3.5 billion. The bulk of the losses were accounted for by coal, nickel and wood pulp, which fell by $216 million (16.9 percent), $173 million (78.5 percent), and $155 million (40.2 percent), respectively.
The Netherlands ranked eighth in 2009. Exports to the Netherlands were down $942 million (25.4 percent) to $2.8 billion. A $372 million decline (68.8 percent) in unwrought aluminum, a $237 million decline (30.8 percent) in non-crude oil, a $102 million decline (38.3 percent) in unwrought nickel, and a $98 million decline (88.1 percent) in rail locomotives accounted for much of the losses.
France ranked ninth in 2009, up from tenth spot in 2008. Exports to France fell $559 million (17.2 percent) to $2.7 billion. The declines across categories were mostly small, with the exception of non-crude oil, which fell by $228 million (74.3 percent) and gas turbines, mainly for aircraft, which was down by $90 million. Exports of iron ores posted a notable increase of $154 million last year.
Rounding out Canada’s top ten export markets was India, in tenth spot. India jumped from 13th place, surpassing Belgium (which had been in ninth place in 2008), along with Norway and Brazil. Canadian exports to India fell 11.2 percent ($270 million) to $2.1 billion. Potash (down $248million) and newsprint (down $175 million) were largely responsible for the decline, while dried legumes posted an offsetting $114 million increase.
Canadian Exports to U.S. Regions, 1992-2009
Canadian exports to the US, US regional shares (percent)
This graph depicts the percentage share of overall Canadian exports to the U.S. accounted for by each of the U.S. eight broader regions in 1992, 2000, 2008 and 2009. The New England region accounted for 8.1% in 1992, 7.3% in 2000, 7.6% in 2008 and 7.9% in 2009. The Mid-East region accounted for 20.9% in 1992, 18.1% in 2000, 16.7% in 2008 and 16.4% in 2009. The Great Lakes region accounted for 38.8% in 1992, 34.7% in 2000, 32.9% in 2008 and 31.2% in 2009. The Plains region accounted for 6.3% in 1992, 6.7% in 2000, 8.4% in 2008 and 7.9% in 2009. The South-East region accounted for 10.2% in 1992, 11.9% in 2000, 11.5% in 2008 and 12.2% in 2009. The South-West region accounted for 3.5% in 1992, 5.0% in 2000, 5.2% in 2008 and 5.8% in 2009. The Rocky Mountains region accounted for 1.7% in 1992, 2.8% in 2000, 4.5% in 2008 and 4.2% in 2009. The Far-West region accounted for 10.4% in 1992, 13.6% in 2000, 13.1% in 2008 and 14.4% in 2009.
Source: Statistics Canada.
The evolution of Canadian goods exports to the United States from1992 to 2009 can be divided into three distinct periods. From 1992 to 2000, Canadian exports to the United States grew rapidly, expanding at an average annual rate of 14.0 percent. From 2000 to 2008, they stagnated, expanding at an average annual rate of only 0.5 percent. Finally, from2008 to 2009, they declined by 28.1 percent as a result of the recession. However, these observationsmask the fact that the United States is not a single market; rather it comprises identifiable regional markets, each with its own distinctive trends and driving forces. Amore accurate depiction of Canada’s export performance in the United States can therefore be derived by examining separately the results for each the following eight U.S. regions: New England, Mid-East, Great Lakes, Plains, South East, South West, Rocky Mountains, and FarWest.
Broadly speaking, Canada’s exports to the United States have been diversifying away from the traditional markets of Great Lakes and Mid-East toward the faster-growing markets in the South and West (Figure 1). Between 1992 and 2009, the combined share of Canada’s overall exports to the United States held by Great Lakes andMid-East fell from59.7 percent to 47.6 percent. Meanwhile, Canada’s exports grew to FarWest, SouthWest, and Rocky Mountains, and to a lesser extent to South East and Plains. Exports to New England have been relatively stable.
Shifts in Canadian goods exports to U.S. regions are broken down into three underlying factors:1
- National growth (NG) indicates how Canadian exports to the region would have changed had they kept pace with total Canadian exports to the United States.
- Industry mix (IM) determines the extent to which the region is populated by industrial sectors where Canada’s exports are growing either faster or slower that the national average. A positive IM indicates the region has an industrial structure with a higher than average tendency to attract Canadian exports. Conversely, a negative IM indicates the region has an industrial structure with a lower than average tendency to attract Canadian exports.
- Regional demand (RD) reflects factors that have fostered or impeded demand for Canadian exports for each region, taking into account the region’s NG and IM.
Because the NG is common to all regions, the analysis will largely focus on the effects of IM and RD factors to help explain Canadian exports among the eight U.S. regions.
From 1992 to 2000, Canadian exports to the United States grew rapidly, up 184.8 percent over the period (Figure 2). This represents the NG benchmark. In general, RD was the most important factor influencing Canada’s export performance in the region, while the impact of IM was minimal. Exports to Plains, South East, South West, Rocky Mountains and Far West expanded faster than the national average, while those to New England, Mid-East and Great Lakes expanded more slowly than the national average.
From 2000 to 2008, both the IM and RD factors played pivotal roles in explaining regional export performance; in many instances, the two factors produced opposing effects. Over the period, Canadian exports to the United States (NG) grew by only 4.4 percent. Exports to New England, Plains, South West and Rocky Mountains grew faster than the national average, while those to South East and Far West grew slower than the national average.
Meanwhile, Canadian exports fell to Mid-East and Great Lakes (Figure 3), influenced by different factors for each region. For Great Lakes, the IM factor weighed heavily on Canadian exports,mostly due to the troubled auto sector. However, this effect was partially offset by the RD factor in conjunction with the NG effect, neither of which was sufficient to pull exports into the positive range for the period. By contrast, for Mid-East, negative RD was a major factor in reducing Canadian exports to the region.
Contribution to Canadian Export Growth by Region, 1992-2000
This graph depicts the factors underpinning Canadian export growth (in percent) to each of the U.S. eight broader regions in over the period from 1992 to 2000. Overall exports to the New England region expanded by 153.9%, the sum of an increase due to national growth (NG) factors by 184.8%, an increase due to industry mix (IM) factors by 20.3% and a decrease due to regional demand (RD) factors by 51.2%. Overall exports to the Mid-East region expanded by 146.2%, the sum of a decrease due to national growth (NG) factors by 184.8%, a decrease due to industry mix (IM) factors by 6.3% and a decrease due to regional demand (RD) factors by 32.4%. Overall exports to the Great Lakes region expanded by 154.5%, the sum of an increase due to national growth (NG) factors by 184.8%, a decrease due to industry mix (IM) factors by 10.7% and a decrease due to regional demand (RD) factors by 19.6%. Overall exports to the Plains region expanded by 202.1%, the sum of an increase due to national growth (NG) factors by 184.8%, an increase due to industry mix (IM) factors by 6.6% and an increase due to regional demand (RD) factors by 10.7%. Overall exports to the South-East region expanded by 231.5%, the sum of an increase due to national growth (NG) factors by 184.8%, an increase due to industry mix (IM) factors by 13.4% and an increase due to regional demand (RD) factors by 33.3%. Overall exports to the South-West region expanded by 305.1%, the sum of an increase due to national growth (NG) factors by 184.8%, an increase due to industry mix (IM) factors by 24.8% and an increase due to regional demand (RD) factors by 95.5%. Overall exports to the Rocky Mountains region expanded by 361.6%, the sum of an increase due to national growth (NG) factors by 184.8%, an increase due to industry mix (IM) factors by 7.3% and an increase due to regional demand (RD) factors by 169.5%. Overall exports to the Far West region expanded by 273.4%, the sum of an increase due to national growth (NG) factors by 184.8%, an increase due to industry mix (IM) factors by 9.5% and an increase due to regional demand (RD) factors by 79.1%.
Source: Statistics Canada.
Contribution to Canadian Export Growth by Region, 2000-2008
This graph depicts the factors underpinning Canadian export growth (in percent) to each of the U.S. eight broader regions in over the period from 2000 to 2008. Overall exports to the New England region expanded by 9.6%, the sum of an increase due to national growth (NG) factors by 4.4%, a decrease due to industry mix (IM) factors by 0.2% and an increase due to regional demand (RD) factors by 5.4%. Overall exports to the Mid-East region fell by 3.4%, the sum of an increase due to national growth (NG) factors by 4.4%, an increase due to industry mix (IM) factors by 6.0% and a decrease due to regional demand (RD) factors by 13.8%. Overall exports to the Great Lakes region decreased by 0.8%, the sum of an increase due to national growth (NG) factors by 4.4%, a decrease due to industry mix (IM) factors by 11.5% and an increase due to regional demand (RD) factors by 6.3%. Overall exports to the Plains region expanded by 31.0%, the sum of an increase due to national growth (NG) factors by 4.4%, an increase due to industry mix (IM) factors by 36.1% and a decrease due to regional demand (RD) factors by 9.5%. Overall exports to the South-East region expanded by 0.8%, the sum of an increase due to national growth (NG) factors by 4.4%, a decrease due to industry mix (IM) factors by 5.5% and an increase due to regional demand (RD) factors by 1.9%. Overall exports to the South-West region expanded by 9.0%, the sum of an increase due to national growth (NG) factors by 4.4%, a decrease due to industry mix (IM) factors by 10.6% and an increase due to regional demand (RD) factors by 15.3%. Overall exports to the Rocky Mountains region expanded by 68.2%, the sum of an increase due to national growth (NG) factors by 4.4%, an increase due to industry mix (IM) factors by 45.0% and an increase due to regional demand (RD) factors by 18.9%. Overall exports to the Far West region expanded by 0.5%, the sum of an increase due to national growth (NG) factors by 4.4%, an increase due to industry mix (IM) factors by 3.2% and a decrease due to regional demand (RD) factors by 7.0%.
Source: Statistics Canada.
Contribution to Canadian Export Growth by Region, 2009
This graph depicts the factors underpinning Canadian export growth (in percent) to each of the U.S. eight broader regions in over the period from 2008 to 2009. Overall exports to the New England region decreased by 25.9%, the sum of a decrease due to national growth (NG) factors by 28.1%, an increase due to industry mix (IM) factors by 3.4% and a decrease due to regional demand (RD) factors by 1.2%. Overall exports to the Mid-East region fell by 29.4%, the sum of a decrease due to national growth (NG) factors by 28.1%, no influence from industry mix (IM) factors and a decrease due to regional demand (RD) factors by 1.2%. Overall exports to the Great Lakes region decreased by 31.9%, the sum of a decrease due to national growth (NG) factors by 28.1%, a decrease due to industry mix (IM) factors by 1.8% and a decrease due to regional demand (RD) factors by 1.9%. Overall exports to the Plains region decreased 32.5%, the sum of a decrease due to national growth (NG) factors by 28.1%, a decrease due to industry mix (IM) factors by 1.9% and a decrease due to regional demand (RD) factors by 2.5%. Overall exports to the South-East region fell by 23.7%, the sum of a decrease due to national growth (NG) factors by 28.1%, an increase due to industry mix (IM) factors by 3.6% and an increase due to regional demand (RD) factors by 0.9%. Overall exports to the South-West region fell by 20.8%, the sum of a decrease due to national growth (NG) factors by 28.1%, an increase due to industry mix (IM) factors by 5.6% and an increase due to regional demand (RD) factors by 1.8%. Overall exports to the Rocky Mountains region decreased by 32.6%, the sum of a decrease due to national growth (NG) factors by 28.1%, a decrease due to industry mix (IM) factors by 6.4% and an increase due to regional demand (RD) factors by 1.9%. Overall exports to the Far West region fell by 20.9%, the sum of a decrease due to national growth (NG) factors by 28.1%, an increase due to industry mix (IM) factors by 0.7% and an increase due to regional demand (RD) factors by 6.6%.
Source: Statistics Canada.
RD effects also helped cap advances in Far West and in Plains. The RD effect in FarWest did not entirely offset the NG and IM effects; Canadian export growth to the region was minimal. However, notwithstanding the negative RD effect, Canadian export growth to Plains was relatively strong—second only to Rocky Mountains. This was due to a strongly positive IM effect (up 36.1 percent), supported by rising exports of energy.
The IM effect was also very positive for Rocky Mountains (up 45.0 percent), underpinned by growing energy exports. The strong RD effect worked in concert with the IM effect to generate strong growth in Canadian exports to this region. However, because Canadian exports to this region are the smallest among the eight regions, there was little impact on overall Canadian exports to the United States.
For South East and South West, IM stunted Canadian export growth. For South East, a small positive RD effect combined with the NG effect helped Canadian exports experience positive, albeit marginal, growth. For South West, RD had a stronger effect than it did for South East, hence export growth was somewhat stronger.
Finally, for New England, RD produced gains that were weakly supported by IM effects.
From 2008 to 2009, the impact of the recession is clearly evident: the NG factor dominated Canada’s declining export performance across the United States (Figure 4). Canadian exports to the United States overall fell by 28.1 percent (NG), and these declines were reflected across all eight U.S. regions. Small positive IM effects for New England, South East, and South West helped mitigate export losses to those regions in 2009, as did small positive RD effects for FarWest, South East, and South West.
1. Source: Industry Canada Trade Data Online database. The data used in this analysis are Canadian export values to U.S. states aggregated to U.S. regions.
Canadian merchandise imports from the world fell by 15.9 percent to $365.2 billion in 2009, a decline of $68.8 billion. Changes in market shares for the top ten partners were much more evident on the import side than was the case for exports. A number of the largest supplying countries lost import shares last year, including the United States (down 1.2 percentage points), Algeria (down 0.7 percentage point), and the United Kingdom (down 0.3 percentage point). At the same time, China (up 1.0 percentage point), Mexico, and South Korea (each up 0.4 percentage point) increased their shares in Canadian imports in 2009.
The United States accounted for slightly over half of Canada’s total imports in 2009. Imports from the United States fell to $186.8 billion last year from $227.3 billion a year earlier. This was a $40.5 billion (17.8 percent) decline and accounted for nearly 60 percent of the total decline in imports between 2008 and 2009. As with exports, falling commodity prices affected import trade values. As well, automotive products and engines also bore the brunt of the decline. Imports of passenger cars fell the most, down $5.4 billion, followed by automotive parts, at $4.0 billion. Trailers and trucks imports also declined by $0.8 billion and $0.6 billion, respectively. In addition, imports of spark-ignition piston engines were down $1.9 billion, and compressionignition piston engines were off by $0.5 billion. Energy products also registered notable declines, especially non-crude oil (down $2.8 billion), natural gas (down $1.6 billion), electricity (down $0.7 billion), and crude oil (down $0.6 billion). Medicaments recorded the largest increase in imports from the United States in 2009, up $0.5 billion. This wasmost likely in response to the campaign by the various governments to inoculate the citizenry against the swine flu virus in the latter months of 2009.
Merchandise imports from China, which continued to be Canada’s secondlargest source, declined by $3.0 billion (7.0 percent) to $39.7 billion in 2009. The declines were led by coke (down $270 million), spark-ignition piston engines (down $191 million), and magnesium (down $150 million). Toys, aluminum bars, tubes and pipes of iron and steel, and seats and parts also registered declines in excess of $100 million. Telephone equipment and parts recorded the largest increase, at $246 million.
Mexico ranked third as a source of merchandise imports into Canada. Imports from Mexico into Canada were down $1.4 billion (7.8 percent) to $16.5 billion in 2009. Electrical and electronic products, crude oil, and automobiles and their parts were responsible for much of the decline. Imports of televisions registered the largest declines, falling $531 million, followed by crude oil (down $512 million), passenger automobiles (down $365 million), insulated wire and cables (down $140 million), and automotive parts (down $130 million). Similar to China above, telephone equipment and parts recorded the largest gain in imports, at $254 million.
Japan placed fourth among the top ten import sources. Imports from Japan fell by $2.9 billion, or 19.2 percent, between 2008 and 2009. Passenger cars experienced the largest decline, falling $1.3 billion while automotive parts registered the largest increase, at $148million.
Imports from Germany, Canada’s fifth-largest source, were down $2.1 billion (16.1 percent) to $10.7 billion. It was the only decline for this country in this past decade. Declines were widespread, although, for the most part, not very big. Passenger automobiles accounted for the largest decline, at $227 million, followed by medicaments, at $21 7million.
The United Kingdom was ranked as Canada’s sixth-largest supplier of imports in 2009, unchanged from 2008. Imports from the United Kingdom were down 25.3 percent to $9.4 billion. With the exception of oil-supplying Algeria, imports from the United Kingdom fell the most ($3.2 billion) among the top non-U.S. import suppliers. Energy products accounted for the lion’s share of the decline as imports of crude petroleum declined by $3.0 billion. Imports of cars and trucks were next in importance, falling by $89 million and $71 million, respectively. Imports of gold and aircraft engines posted the largest increases, at $156 million and $144 million, respectively.
Although imports from South Korea fell in 2009, that country vaulted fromtenth position to seventh position among the leading import suppliers to Canada. This was because imports from South Korea fell by only $79million (1.3 percent) to $5.9 billion last year. It was the lowest decline amongst the top ten suppliers. For those products posting declines, the losses were not very big, with the largest at $130 million for telephone sets and parts. South Korea was the only country among the leading automotive import suppliers to register an increase in passenger car imports into Canada in 2009, at $153 million.
France also improved its ranking from 2008 to 2009, moving from ninth place to eighth place. Imports from France were down by $426 million (7.0 percent) to $5.6 billion last year. While the number of products that registered declines outweighed those that registered increases, most of the gains and losses were small. Gains were led by medicaments (up $148 million) while losses were greatest for non-crude oil (down $81 million).
After having placed just outside the ten leading import suppliers in 2008, Italy joined this group in 2009, placing ninth. Notwithstanding this upwardmovement in the rankings, imports from Italy were down by 13.2 percent (or $677million) to $4.4 billion. Both gains and losses were not very large, as medicaments posted the largest increase (up $87 million) while iron and steel tubing and pipes recorded the largest decline, at $55 million.
Imports from Algeria, which had moved fromtenth place to seventh in 2008, reverted back to their tenth place ranking last year. Imports were more than halved, falling by $3.9 billion (51.1 percent) to $3.8 billion. The decline was entirely due to crude petroleum, which accounted for 99.95 percent of Canada’s imports from Algeria last year.
Merchandise Trade by Top Products
Out of approximately 1,300 goods,3 the 28 products selected for Table 5-1 were chosen for their overall impact on the change in Canada’s trade balance. Together, these products accounted for nearly half of Canadian merchandise exports in 2009, nearly 30 percent of merchandise imports, and about 80 percent of the change in Canada‘s merchandise trade balance between 2008 and 2009. As shown in the table, these top drivers fall into two broad categories: trade surplus products and trade deficit products.Within each category, trade can be further subdivided into trade that is substantially two-way and trade that is primarily one-way.
|2009 Exports||Export Growth||2009 Imports||Import Growth||2009 Balance||2008-09 Change in Balance|
|Trade Surplus Products|
|Large Exports and Large Imports|
|Oil (Not Crude)||$11,970,200,000||-33.0%||$6,944,000,000||-33.7%||$5,026,200,000||-$2,359,000,000|
|Passenger Cars (Persons)||$26,565,000,000||-23.0%||$19,419,600,000||-28.0%||$7,145,500,000||-$407,100,000|
|Large Exports and Small Imports|
|Newsprint, In Rolls Or Sheets||$2,803,000,000||-34.3%||$43,300,000||-26.9%||$2,759,700,000||-$1,445,200,000|
|Wheat and Meslin||$6,021,300,000||-13.8%||$18,900,000||56.0%||$6,002,500,000||-$974,000,000|
|Polymers of Ethylene, Primary Forms||$3,280,100,000||-28.2%||$980,700,000||-27.3%||$2,299,400,000||-$922,600,000|
|Iron Ores & Concentrates||$3,369,500,000||9.2%||$298,100,000||-72.1%||$3,071,300,000||$1,055,100,000|
|Trade Deficit Products|
|Large Exports, Large Imports|
|Telephone Equipment & Parts||$3,649,200,000||-23.1%||$6,214,400,000||0.0%||-$2,565,100,000||-$1,096,600,000|
|Medicaments, in Dosage Form||$5,633,400,000||7.6%||$9,512,100,000||14.1%||-$3,878,700,000||-$775,200,000|
|Small Exports, Large Imports|
|Aluminum Oxides & Hydroxides||$98,100,000||-30.0%||$1,302,700,000||-28.1%||-$1,204,600,000||$465,900,000|
|Computers, Magnetic Readers, etc.||$1,962,400,000||-19.4%||$7,423,100,000||-13.0%||-$5,460,700,000||$631,800,000|
|Television Receivers, incl.|
Video Monitors & Projectors
|Bulldozers, Graders, Scrapers etc.||$216,700,000||-54.4%||$1,855,100,000||-46.0%||-$1,638,400,000||$1,324,100,000|
|Vehicles (Transport of Goods)||$1,592,400,000||-57.4%||$8,591,400,000||-6.9%||-$6,999,100,000||-$1,508,900,000|
|Trailers etc.; Not Mechanically Propelled, Parts||$263,800,000||-37.5%||$1,608,200,000||-33.3%||-$1,344,400,000||$644,300,000|
|Total of Above||$169,732,800,000||-31.7%||$106,491,300,000||-24.8%||$63,241,500,000||-$43,434,100,000|
Products in which there is substantial two-way trade (i.e., with both large exports and large imports) and in which Canada reports a trade surplus include energy products, passenger cars, and aircraft engines. The resource-based products within this group experienced substantial declines in both exports and imports because of the price effects already noted. Together, these five products accounted for 58.1 percent (or $32.0 billion) of the overall decline in Canada’s merchandise trade balance, with natural gas (30.1 percent of the trade balance) and crude oil (21.8 percent of the trade balance) accounting for much of decline.
Products in which Canada reports large exports and smaller imports are principally non-energy resources, such as wheat, potash, wood products, and metals. Several of these products experienced significant price corrections from high levels observed in 2008. Pulp and paper, on the other hand, has been declining on a longer-termbasis, while lumber is affected by the slowdown in U.S. housing construction. Jointly, these products accounted for another 23.7 percent of the overall decline in Canada’s 2009 merchandise trade balance, or $13.0 billion.
Products with substantial two-way trade but in which Canada reports a trade deficit include telecommunications equipment and medicines. Aweak global business investment environment explains the fall in telecommunications exports. On the other hand, trade inmedicine was up, possibly linked to efforts to inoculate the populace fromcertain strains of the swine flu. The trade deficit in these products expanded by $1.9 billion, or 3.4 percent of the overall decline in themerchandise trade balance last year.
Finally, products in which Canada reports large imports and smaller exports fall mostly in the manufacturing sector. For the most part, trade in these manufactures was down over 2008 levels, in line with the economic downturn. However, exports of television receivers registered a strong advance last year. The eight products in this category registered a $3.5 billion improvement in their trade deficits, to partially offset the deterioration inmerchandise trade balances registered by the other three categories discussed above.
Merchandise Trade by Major Product Groups
This section examines 2009 trade performance in the following product groupings: energy, vehicles and parts, machinery and mechanical appliances, electrical and electronic machinery, technical and scientific equipment, agricultural and agri-food products, minerals and metals, chemicals, plastics and rubber, wood, pulp and paper, textiles, clothing and leather, consumer and miscellaneous manufactured products, and other transportation equipment.
As discussed in the previous chapter, energy products played an important role in the decline of both Canadian exports and imports of goods in 2009,mostly because of falling energy prices accompanied by falling trade volumes.
Canadian exports of mineral fuels and oils plunged $51.6 billion (38.7 percent) in 2009 to $81.8 billion, wiping out the $39.8 billion surge in exports a year earlier. Similarly, imports declined, completely reversing the increase registered in 2008, as imports of these products fell by $19.4 billion (36.1 percent) to $34.4 billion for the year. With exports declining bymore than imports, the trade surplus for energy products narrowed by $32.2 billion from $79.6 billion to $47.4 billion.
In 2009, the United States received 91.7 percent of Canada’s energy exports, supplied 31.2 percent of our energy imports, and was responsible for more than the total decline in the trade surplus. In fact, Canada improved its overall energy trade surplus by $10.4 billion with the non-U.S. rest of the world. The bulk of the improvements came from trade with Algeria, the United Kingdom, Norway, Angola, and Iraq, as Canada reduced its trade deficits with these countries by lowering energy imports. Gains were also registered for China, as an increase in exports combined with a decrease in imports was the reason behind a movement from an energy trade deficit in 2008 to a surplus in 2009.
Three commodities—crude oil, noncrude oil, and other petroleum gases (primarily natural gas)—make up more than 90 percent of the trade in energy products, for both exports and imports. Crude oil is the dominant commodity, accounting for over half of all energy exports and more than 60 percent of energy imports. Crude oil exports plunged 36.7 percent, down $24.7 billion in value to $42.7 billion in 2009. All of the loss came fromlower exports to the United States (down $25.0 billion). Small gains in exports were registered for a number of Asian economies, including China, Malaysia and India. At the same time, imports fell at a slightly greater pace— down 37.5 percent, or $12.7 billion, to $21.2 billion. The losses were concentrated in a number of trading partners, led by Algeria (down $3.9 billion), the United Kingdom (down $3.0 billion), Norway (down $2.6 billion), Angola (down $1.4 billion) and Iraq (down $0.9 billion). With the decline in exports exceeding that for imports, Canada’s trade surplus in crude oil narrowed by $12.0 billion to $21.5 billion.
Petroleum gases (principally natural gas) accounted for 22.3 percent of energy exports and 10.3 percent of energy imports in 2009. Virtually all of Canada’s trade in petroleum gases is with the United States (over 99.9 percent of exports and 96.0 percent of imports). Exports were almost halved between 2008 and 2009, falling from $36.3 billion to $18.2 billion. Imports were much smaller: they fell by 29.6 percent, or $1.5 billion to $3.5 billion. As a result of these movements, the trade surplus in petroleum gases shrank by $16.6 billion, to $14.7 billion, to account for just over half the overall decline in the surplus of energy products.
Heavy petroleum oils accounted for about 60 percent and light petroleum oils (including gasoline) for about 40 percent of non-crude oil trade. Trade was down by roughly a third in both directions. Overall exports of non-crude oil fell $5.9 billion to $12.0 billion, while imports retracted by $3.5 billion to $6.9 billion—mostly on declines with the United States. The trade surplus narrowed by $2.4 billion as that for light petroleum declined by just under $1.1 billion to a little over $1.1 billion while that for heavy oils was lower by $1.3 billion to $3.9 billion.
Most of the smaller energy categories registered deterioration in their trade surpluses last year, including coal (down $0.9 billion to $3.9 billion) and electricity (down $0.7 billion to $1.7 billion).
Vehicles and Parts5
Exports of vehicles and parts fell for the fifth consecutive year in 2009, declining by $15.5 billion (28.8 percent) to $38.3 billion. Almost 95 percent of the decline was attributable to a $14.7 billion decrease in exports of these products to the United States, as the financial difficulties experienced by major North American auto manufacturers and falling U.S. demand curtailed exports. Three products—passenger vehicles, auto parts, and motor trucks—were behind the losses, as their exports fell by $8.0 billion, $4.2 billion, and $2.1 billion, respectively.
Vehicle imports fell nearly as much as exports last year, declining by $13.8 billion (21.9 percent) to $49.4 billion. Imports of automotive products suffered in the face of dwindling domestic sales. Imports fromfour of the top five supplying countries fell in 2009. A 26.1 percent decline in imports from the United States accounted for over 80 percent of the overall decline. Imports from Japan were down by $1.2 billion, while those from Germany and Mexico were off by $370.3 million and $306.1 million, respectively. Only fifth-ranked South Korea managed to buck the trend, increasing the value of its exports to Canada by 11.3 percent, or $195.8 million. As was the case for exports, passenger vehicles and auto parts were behind the losses, with imports of these products falling by $7.5 billion and $4.0 billion, respectively. Imports of trailers (down $0.8 billion) and motor trucks (down $0.6 billion) accounted for much of the remainder of the declines.
With exports falling more than imports, the trade deficit for vehicles and parts widened by $1.7 billion, to $11.1 billion in 2009. A $3.3 billion increase in the automotive deficit with the United States accounted for more than the total decline, as reduced imports from other sources helped to improve sectoral trade balances elsewhere. Much of the deterioration in the trade deficit came from the trade in motor trucks. Truck exports fell $2.1 billion to $1.6 billion while imports dropped by only $0.6 billion to $8.6 billion, as the trade deficit for trucks grew by $1.5 billion, to $7.0 billion. The trade deficit in automotive parts edged wider, growing to $8.0 billion from $7.8 billion, while the trade surplus in passenger cars narrowed $0.4 billion to $7.1 billion last year.
Canadian Exports to the United States by Truck
Canadian Exports to the United States by Truck
This graph depicts the value and volume of Canadian exports to the U.S. by truck from 2000 to 2009. The value of exports by truck (in US$ billion) was US$127.8 billion in 2000, fell to around US$117 billion in 2001-2003, gradually expanded to US$150.4 billion in 2007 before decreasing to US$141.4 billion in 2008 and to US$105.1 billion in 2009. Exports by truck in volume terms (millions of tonnes) were 65.7 million tonnes in 2000, fell to 62.7 million tonnes in 2001, recovered to around 65-66 million tonnes in 2002-2005, before gradually declining to 43.5 million tonnes in 2009.
Source: U.S. Bureau of Transport Statistics, BTS.
The United States is by far Canada’s largest destination for exports, and trucking is the dominant mode for transporting them. Although exports by truck accounted for over 50 percent of exports to the United States in 2004, this fell to 46.7 percent in 2009.1 Increased volumes and dollar values of pipeline traffic, in conjunction with stagnant or reduced truck traffic, contributed to the decline in the relative proportion of exports by truck. After little growth between 2000 and 2003, the value of exports by truck grew between 2003 and 2007,mainly due to increased valuation in Canadian dollar terms, before declining again from 2007 onward. However, in terms of trucking volumes, the data show a considerable decline (33.8 percent) in the period between 2000 and 2009.
Trucks are most often used to transport goods with values in the middle of the spectrum. Common trucked exports include automotives,machinery and electronics. Lower-valued goods such as agricultural products and natural resources tend to be shipped by rail and/or by sea, or by pipeline in the case of oil and natural gas, while high-value and timesensitive goods – such as preciousmetals, technical/scientific equipment and pharmaceuticals – are more often shipped by air. This is borne out by the value per kilo statistics (see table). In 2009, the value of trucked exports to the United States averaged US$2.42/kg, with rail and marine vessel loads valued much lower, and air loads much higher (US$206/kg).
Most Canadian exports crossing the border into the United States by truck do so at fivemain entry points, four of which are located in southern Ontario and the fifth in nearby Lacolle, Quebec.2 Together, these five border points received 72.5 percent of Canadian exports by truck to the United States in 2009. However, the importance of the “big five” border points has been declining since 2000, when they received more than 75 percent of Canada’s exports into the United States by truck. By 2009, all except for Lacolle had lost share in total exports by truck.
|Total Exports to U.S.*||Export Value (US$)||Value per kg (US$)||Commodities Breakdown|
* Percentage does not add up to 100%, mail and other modes (not shown) account for another 4%
We can also assess the overall concentration of trucked exports through all Canada-U.S. crossings by using the Herfindahl-Hirschman Index (HHI). The HHI was originally developed as a component of industrial organization theory but is commonly used to evaluate degrees of concentration. The HHI, which ranges between 0 and 1, is used here to measure the relative concentration of trucked exports at border crossing points; higher scores indicate higher concentrations of goods transported in fewer crossings. The data show that the HHI increased between 2000 and 2006, remained flat in 2007, and then fell significantly in 2008 and 2009. By all measures, exports transported by truck are now less concentrated than at the beginning of the decade.
Top Five Crossings for Canadian Exports by Truck, 2009
The graph depicts the share of truck exports (percent) by the five major border crossings in 2009; Windsor 28.4%, Niagara Falls 18.1%, Sarnia 12.6%, Lacolle 8.2%, Lansdowne 5.2%, with all others comprising the remaining 27.5%. The commodity composition (percent) of exports by truck in 2009 for each of the major border crossings is also depicted. Windsor ; Autos 31.4%, Machinery & equipment 19.0%, Plastics 4.9% and all other commodities 44.7%. Niagara Falls; Autos 15.2%, Machinery & equipment 17.7%, Plastics 6.3% and all other commodities 60.8%. Sarnia; Autos 19.5%, Machinery & equipment 22.0%, Plastics 6.7% and all other commodities 51.7%. Lacolle; Precious metals/ stones 15.1%, Autos 6.4%, Machinery & equipment 13.7% and all other commodities 64.8%. Landsdowne; Precious metals/ stones 13.4%,Paper & paperboard 12.7%, Aluminum 11.0% and all other commodities 62.9%.
Source: U.S. Bureau of Transport Statistics, BTS.
|Port/District||2000||2000||2006||2006||2009||2009||2000-06 Change||2006-09 Change|
The primary factors behind these concentration patterns are the changes in North American automotive trade and the effects of the global economic crisis. From 2000 to 2006, an increasing amount of trade by truck flowed through Windsor to Detroit, while the share of trucking traffic held by the other four of the “big five” entry points fell. This was reflected in the HHI during the period. This also corresponds to a period of growth in Canadian auto exports (HS 87), 63.8 percent of which were trucked across the Windsor-Detroit border by 2007. In fact, trucked exports of automotive products grew at an average annual rate of 3.0 percent between 2000 and 2006, faster than other (non-auto) trucked exports (2.6 percent). Over that period, Windsor’s share of total trucked exports increased by 4.2 percentage points, while the other four crossing points lost a combined 3.6 percentage points.
The subsequent collapse in automotive trade was the main reason why the share of exports passing through the Windsor-Detroit border by truck dropped 5.5 percentage points between 2006 and 2009. The value of Canadian exports at this border point declined considerably, falling from US$51 billion to US$30 billion over this period. Other key crossing points gained share (especially Lacolle, due largely to exports of precious stones and metals). But the fall in Windsor’s share over this period was not fully offset by gains at the other “big five” crossing points, resulting in amore diversified pattern of truck trade across the border.
Concentration of Canadian Exports to the United States by Truck
The graph depicts a concentration index for Canadian exports by truck through the 5 major border crossings as well as the share of exports by truck through the Windsor-Detroit crossing from 2000 to 2009. In 2000-2001 the border crossing concentration index was 0.15, rose gradually to 0.17 in 2007-2008 before falling back to 0.15 in 2008 and to 0.14 in 2009. The percentage share of overall exports by truck reaching the U.S. via the Winsor-Detroit crossing was 30.0% in 2000-2002, gradually rose to 34.0% in 2006-2007, before falling to 30.8% in 2008, and to 28.4% in 2009.
Source: U.S. Bureau of Transport Statistics, BTS.
Canadian Exports of Automotive Products to the United States, 2009
The graph depicts Canadian exports of automotive products in 2009 by mode of transport and by major border crossings for exports by truck. The percentage share of exports by truck was 52.6%, by rail 46.9% and 0.4% by other mode of transport. For exports by truck the share shipped via Winsor was 29.6%, via Niagara Falls 9.1%, via Sarnia 8.2% and via other border crossings 5.7%.
Source: U.S. Bureau of Transport Statistics, BTS.
Thus, almost all of the diversification over that period can be attributed to the sharp fall in auto exports passing throughWindsor into Detroit. These have declined by US$11.2 billion since 2007, compared to a total US$15.6-billion decline in auto exports by truck over that period. As a result, Windsor’s share of Canadian automotive exports trucked to the United States fell from63.8 percent in 2007 to 56.3 percent in 2009. Despite a sharp fall in auto exports (down US$2.7 billion) in Niagara Falls, the share of those exports (by truck) arriving at that border crossing remained constant, while the share of the other three top crossings rose.
The influence of the auto trade on export concentrations at the top five border crossing points is evident when the composition of Canada’s auto exports to the United States is analyzed. As shown in the accompanying chart, some 52.6 percent of Canadian auto exports to the United States are transported by truck, most of which cross through Windsor into the United States at Detroit. Including Niagara Falls and Sarnia, southern Ontario crossings account for 89.1 percent of trucked exports of automotive products.
1All data presented in this section are from the US Bureau of Transportation Statistics (BTS). The term "exports" is used to refer to the United States imports from Canada as compiled by the BTS and expressed in current United States dollars.
2 Canadian designations of these crossings are Windsor, Niagara Falls, Sarnia, Lacolle and Lansdowne. In the U.S. BTS data, they are referred to as Detroit, Buffalo, Port Huron, Champlain-Rouses Point and Alexandria Bay respectively.
Mechanical Machinery and Appliances6
Mechanicalmachinery and appliances (hereafter machinery) comprises a single chapter in the HS classification system. It is also one of the largest categories of goods in Canada’s trade, covering a variety of items ranging from ball bearings to mobile cranes and derricks. It is also among the largest categories in terms of value of imports, behind only chemicals, plastics and rubber.
Machinery exports fell $6.4 billion (17.5 percent) in 2009, to $30.2 billion. Declines were widespread, with only 13 of 87 sub-categories registering increases. Leading the declines were parts for moving machinery (such as cranes, bulldozers, and forklifts), gas turbines (mainly for aircraft), and computers and components, as these exports decreased by $607.9million, $473.1million, and $473.0million, respectively. The bulk of the declines occurred in exports to the United States. Exports to that country fell by $5.6 billion, or 88.1 percent of the overall decline in machinery exports. Smaller, though still notable, declines were registered for Germany (down $122.4 million), Russia (down $111.7 million), and Cuba (down $100.2million). Small gains were posted for a number ofMiddle East countries (e.g., Algeria, Qatar, Libya, and Oman) and a number of Asian economies, including Malaysia, Japan, Singapore, South Korea, and China.
Machinery imports were also down in 2009, falling by $10.7 billion (16.9 percent) to $52.8 billion. As with exports, the vast majority of the decline was with the United States, as imports from that country fell by $7.1 billion, or roughly two thirds of the totalmachinery decline. Imports fromJapan (down $900.8 million), China (down $555.2 million), and Germany (down $496.6 million) also registered sizeable declines. Four products—piston engines, combustion engines, self-propelled dozers, and computers and components— accounted for half the declines in machinery imports. Gas turbines posted the largest increase, at $173.4 million, followed by agricultural machinery associated with harvesting, at $126.9 million.
With imports falling more than exports, the trade deficit for mechanical machinery and appliances narrowed by $4.3 billion, to $22.6 billion in 2009. The trade deficits with the United States (down $1.5 billion), Japan (down $0.9 billion), China (down $0.8 billion), and Germany (down $0.4 billion) all fell, to account for over 80 percent of the improvement in the trade balance.
Electrical and Electronic Machinery and Equipment7
Exports of electrical and electronic products contracted by $3.0 billion to $16.2 billion, most notably to the United States (down $2.4 billion, or 82.2 percent of the total). Smaller declines were registered for Germany (down $94.4 million), the United Kingdom (down $81.6million), and Thailand (down $72.7million). In contrast, exports to Mexico increased by $209.7 million. The declines were widespread, as 39 of the 48major sub-components that comprise the category were down. However, the bulk of the declines were concentrated in five products—telephone and related equipment, integrated circuits, insulated cables and wires, electric motors and generators, and parts for televisions, radios, and radar equipment—which, when combined, accounted for nearly three quarters of the overall decline in this category.Within these five products, exports to the United States fell by $1.8 billion, to account for the bulk of the decline. Exports of seven products increased in 2009, with the largest increase being formonitors, projectors and television receivers—which rose by $222.0 million— mainly to the United States, the United Kingdom, and a number of Asian economies (including South Korea, Japan, China, Australia, Philippines, and Hong Kong).
Imports of electrical and electronic products retreated to $38.3 billion in 2009, down $4.1 billion from2008. Lower imports from the United States (down $1.7 billion), Mexico (down $0.7 billion), Japan (down $0.4 billion), and Denmark (down $0.4 billion) accounted for three quarters of the decline, while Turkey posted the largest increase, at $37.2million. As was the case for exports, declines were widespread across products, with 41 of 48major sub-categories registering losses fromthe previous year. Five products posted reductions of more than $200million, led by television receivers, various media for sound recording, television and radio transmission apparatus, electrical switching equipment, and insulated wire and cable. The majority of the losses from these five products accrued from fewer imports from Mexico (down $0.8 billion), the United States (down $0.7 billion), Japan (down $0.3 billion), and China (down $0.1 billion).
With exports retreating less than imports, the trade deficit in electrical and electronic machinery and equipment narrowed by $1.1 billion to $22.1 billion in 2009.
Technical and Scientific Equipment8
Exports of technical and scientific equipment slipped to $5.4 billion in 2009, down $0.5 billion over 2008, as exports to the United States declined by $369.7 million. At the same time, imports were down by $0.4 billion, to $11.2 billion, with the United States accounting for virtually all of the decline. Imports from Germany also fell $91.8 million, while those from China advanced by $68.9 million. On the export side, instruments and apparatus for physical or chemical analysis declined the most (down $108.9 million), followed by other miscellaneousmeasuring or checking instruments, appliances and machines (down $94.5 million), and instruments/apparatus used for measuring or detecting radiation and electrical phenomena (down $88.3million). For imports, losses in thermostats (down $190.3 million), other miscellaneous measuring or checking instruments, appliances andmachines (down $125.3million), surveying, meteorological, and geophysical instruments (down $116.2 million), and instruments and apparatus formeasuring or checking liquids or gases (down $110.8 million) were partially offset by gains inmiscellaneous optical devices, appliances and instruments (up $119.1 million), and medical/ surgical instruments and appliances (up $121.7 million).
The trade deficit for technical and scientific equipment widened by $0.1 billion, to $5.8 billion last year.
Agricultural and Agri-food Products9
Canadian exports of agricultural and agri-food products retreated fromtheir high levels of 2008, falling by $3.8 billion (or 8.9 percent) to $38.8 billion in 2009. As indicated in the previous chapter, both prices and volumes fell across most commodities, while exports of live animals and beef continued to be hampered by trade restrictions and pork exports experienced headwinds via an association with the swine flu. Among all agricultural products, cereals experienced the greatest decline in exports, falling $1.7 billion (or 19.2 percent) to account for over 44 percent of the overall decline.Wheat was responsible for slightly less than 60 percent of the fall within cereals, with barley, oats, and corn making up the remainder of the decline. Exports of live animals fell $691.6million, as cattle accounted for three quarters of the decline and swine the rest. Notwithstanding the increases to China noted previously, both canola seed (down $406.5 million) and canola oil (down $326.7 million) also suffered sizeable cutbacks to their overall export levels. By destination, four countries accounted for more than the total decline in agricultural and agri-food exports, with those to the United States accounting for about two thirds of the total decline. Japan, Algeria, andMexico followed, with declines of $742.5 million, $458.8 million, and $361.8 million, respectively. In addition, eight other countries— Belgium, Iran, Indonesia, Russia, Turkey, Malaysia, Pakistan, and Sudan—registered decreases in the range of $100 million to $300million. However, these losses were offset by gains to Iraq, Bangladesh, and China of $316.3 million, $334.9 million, and $922.2 million, respectively.
Agriculture and agri-food products was the only major commodity group to register an increase in imports over 2008, as imports rose by $794.7 million (2.7 percent) to $29.8 billion last year. For the most part, changes by supplier were fairly small. For example, the largest decline was a $44.2million drop in imports from France. Three countries accounted for over 80 percent of the total increase: the United States (54.9 percent), Mexico (15.2 percent), and Brazil (11.2 percent). Gains were led by a $239.4 million advance in preparations of cereals, flour starch ormilk (including bread, pastry, and pasta), and by a number of fresh fruits and vegetables including berries (up $51.1 million), bananas (up $48.5 million), lettuce (up $44.7 million), mushrooms (up $43.5 million), and grapes (up $42.9 million).
With falling exports and rising imports, Canada’s trade surplus in agriculture and agri-food products narrowed by $4.6 billion to $9.0 billion in 2009.
Minerals and Metals10
As previouslymentioned, trade inminerals andmetals is very sensitive to economic conditions. In times of economic booms, trade is very robust, while during a downturn in economic output the demand for these products is weakened. In 2009, exports of minerals andmetals plunged by $21.8 billion to $48.5 billion. Losses were widespread throughout the category, led by aluminum, iron and steel, and nickel products, as exports of these products fell $4.2 billion, $3.9 billion, and $3.7 billion, respectively.
Exports were down to almost all developed countries, with the exception of a handful of countries (Singapore: up $104.6 million; France: up $86.1 million; Spain: up $8.5million; Austria: up $7.1million; and, Ireland: up $1.4 million). The United States accounted for much of the decline as that country has been in a prolonged recession dating back to 2007. Reduced output in the automotive sector and broad economicmalaise helped push exports of aluminum, iron and steel, and iron and steel products down by $3.4 billion, $3.1 billion, and $2.2 billion, respectively, to account for over 60 percent of the reduction in U.S.- bound exports of minerals and metals. In addition, exports of copper and nickel also fell by sizeable amounts, accounting for a further 20 percent of the overall decline in exports to the United States for this sector. Exports to Japan and Norway also fell significantly in 2009. For Japan, exports were down $1.2 billion, while they were off by $1.1 billion forNorway. In the case of the former, it was mineral ores, aluminum, nickel, and other basemetals that accounted for the decline, while for latter it was nickel, other base metals, and copper behind the fall.
On the import side, imports of metals and minerals decreased by $10.6 billion in 2009, to $39.5 billion. As was the case for exports, the declines were widespread, with only precious stones and metals registering an increase over 2008. Once again, because of the downturn, and, in particular, decreased automotive output, the bulk of the declines were concentrated in iron and steel, iron and steel products, and aluminum. Together, these three groups accounted for over 70 percent of the total decline in Canada’s imports ofminerals and metals, as they retreated by $3.9 billion, $2.5 billion, and $1.2 billion, respectively. The bulk of the declines came from fewer imports from the United States (down $8.0 billion, or 75.1 percent of the total) and China (down $1.2 billion, or 11.3 percent of the total). For the United States, iron and steel and articles of iron and steel posted the largest decreases, with mineral ores, aluminum, precious metals, and copper also declining. For China, it was again iron and steel, and articles of iron and steel that decreased the most, while other base metals and aluminum contributed to the decline.
With respect to precious stones and metals, imports increased by $0.4 billion— the only category in metals and minerals to register an advance. A $0.8 billion decline in imports fromthe United States was offset by increases from Peru (up $0.4 billion), Chile (up $0.3 billion), the United Kingdom and Argentina (both up $0.2 billion), and Switzerland and Surinam (both up $0.1 billion). Most of the U.S. decline was in gold and precious metals scrap, which were the areas where Peru and Chile advanced the most.
Notwithstanding the fact that imports of metals and minerals fell by $10.6 billion, the trade surplus for this category narrowed by $11.2 billion (to $9.0 billion), as exports fell by $21.8 billion in 2009.
Chemicals, Plastics and Rubber11
Exports of chemicals, plastics, and rubber decreased by $9.3 billion to $38.9 billion in 2009. Fertilizers and plastics led the decline, falling by $3.0 billion each, and organic and inorganic chemicals exports fell by $1.8 billion and $1.5 billion, respectively. Smaller losses were registered for rubber, dyes and paints, miscellaneous chemicals, and perfumes, but these were largely offset by an increase in pharmaceuticals.
The bulk of the decline in fertilizer exports overall was due to a $2.6 billion decrease in potash exports, with nitrogenbased fertilizers accounting for much of the remainder. The United States accounted for a little over 40 percent of the decrease in potash exports. Developing Asia was responsible for another 40 percent of the decline, led by fewer exports to China, India, Malaysia and Indonesia. Much of the remainder of the decline was to Latin America, notably to Brazil, Mexico, and Colombia. A $375.3 million decline in exports to the United States accounted for more than the entire $369.5 million decline of nitrogen- based fertilizers.
Nearly 90 percent (or $2.7 billion) of the overall decline in exports of plastics was the result of fewer exports to the United States.While most sub-components of plastics were down, the largest declines were registered for polyethylene and polyester.
Exports of organic chemicals to the United States were down $1.3 billion from 2008 levels and those to China were off by $0.5 billion, to account for much of the overall decline in this category. The declines were mainly in cyclic hydrocarbons (40.8 percent of the total), acyclic alcohols and their derivatives (27.4 percent of the total), and acyclic hydrocarbons (25.9 percent of the total). Fewer exports of inorganic chemicals to the United States (down $0.8 billion) and, to a lesser extent, to the United Kingdomand China (down $0.2 billion each) were behind the decline in this category, as five products—ammonia, sulphur, uranium and radioactive isotopes, hydrogen, and sulphuric acid—accounted for about 87.0 percent of the overall decline.
Imports of chemicals fell by $3.2 billion to $53.4 billion in 2009. The losses were most heavy in plastics (down $1.9 billion), organic chemicals (down $1.4 billion), and inorganic chemicals (down $1.1 billion), and were partially offset by a $1.8 billion increase in imports of pharmaceuticals. Nearly two thirds of the decline (or $2.1 billion) came from fewer imports from the United States. Smaller, though sizeable declines, were registered for Germany, Surinam, Jamaica, Israel, Chile, and Trinidad and Tobago.
Canadian imports of plastics were down across most sub-categories, most notably for polyethylene (down $368.0million), polypropylene (down $269.8million), and PVC, or polyvinyl chloride, (down $215.1 million). Imports from the United States were down $1.7 billion, to account for nearly 90 percent of the overall decline in plastics imports.
Imports of organic chemicals declined $1.4 billion with four products—acyclic alcohols and their derivatives, other heterocyclic compounds, acyclic hydrocarbons, and cyclic hydrocarbons—accounting for about two thirds of the loss. Just over half of the decline came from U.S. imports, while smaller losses were registered for Switzerland, France, Israel, India, Chile, and Trinidad and Tobago, to account for much of the remainder.
For inorganic chemicals, imports were down $1.1 billion from2008 levels. Imports were down from the United States ($324.3 million), China ($219.0 million), Surinam ($200.3 million), and Jamaica ($165.3 million) to account for more than 80 percent of the decline. Nearly half the declines resulted from fewer imports of aluminum oxides.
A $9.3 billion decline in exports coupled with a $3.2 billion decline in imports helped push Canada’s trade deficit in chemicals, plastic, and rubber wider by $6.1 billion, to $14.5 billion in 2009.
Wood, Pulp, and Paper12
Exports of wood, pulp, and paper fell $6.9 billion to $24.8 billion in 2009, with wood and paper and paper products each accounting for about one third of the decline. Lower exports of pulp accounted for much of the remaining decline. Only exports of straw registered an increase.
Exports of wood products fell for the fifth consecutive year, down $2.4 billion in 2009. Almost 90 percent of the decline was accounted for by fewer exports to the United States. Japan was next, accounting for 9.1 percent of the decline. The declines were felt most heavily in lumber (down $1.4 billion), windows, doors, shingles, shakes, and panels (down $359.0million), particle board (down $181.7million), and plywood (down $98.7 million).
Paper and paperboard exports were down $2.2 billion to $10.9 billion in 2009. Exports to the United States fell by $1.5 billion, while those to India and Brazil were down $173.7 million and $77.5 million, respectively. Two thirds of the decline, or $1.5 billion, accrued to newsprint, while exports of uncoated paper and uncoated kraft liner paper fell by $0.5 billion and $0.2 billion, respectively.
Exports of pulp fell by $2.0 billion in 2009, with the United States accounting for about half the decline and a number of Asian economies (i.e., South Korea, Japan, Indonesia, Taiwan, and Thailand) accounting for a further quarter of the decline.
Imports of wood, pulp, and paper were down $1.1 billion as declines were widespread. Wood led the decreases, as imports fell $436.7 million, followed by paper and paperboard (down $290.0 million), pulp (down $188.5 million), and books and newsprint (down $166.0 million).
With exports down by $6.9 billion and imports down by only $1.1 billion, the trade surplus in wood, pulp, and paper narrowed by $5.8 billion to $12.0 billion in 2009.
Textiles, Clothing, and Leather13
Canadian exports of textiles, clothing, and leather (TCL) fell for the seventh consecutive year in 2009, as they slipped another $678.6million down the scale, from $4.7 billion in 2008 to $4.0 billion.With the exception of small increases in miscellaneous vegetable textiles and wool, exports fell for all other major categories in this group. Exports to the United States fell $431.5 million, to account for just under two thirds of the losses. A quarter of the decline came from reduced exports of raw hides and raw furskins.
While export declines were widespread, it was exports of woven apparel as a group that fell the most, down $116.1 million in 2009, followed by those for furskins and artificial fur (down $95.7 million). Broadly speaking, reduced exports to the United States accounted for the bulk of the declines. One of the few exceptions to this observation was for furskins, where reduced shipments to Hong Kong accounted for just over half the decline—with the bulk of the remainder coming from European Union countries, where anti-fur sentiment is quite strong.
Imports of TCL products were down by $770.9 million to $15.7 billion. As with exports, declines were widespread, with only footwear imports registering a small increase last year. The declines were greatest for manmade filaments (down $115.5 million) and certain leather articles (down $108.9 million).
Regionally, fewer imports from the United States (down $366.7 million) accounted for just under half the overall decline. Imports from China were down $194.0 million and those from Italy were down by $130.7 million. Next in terms of size of decline were imports from Mexico, Turkey, Taiwan, South Korea, and Hong Kong, at $56.8 million, $38.8 million, $33.3million, $31.6million, and $29.6 million, respectively. On the other hand, imports from a number of Asian countries registered increases, including fromPakistan, Cambodia, Indonesia, Vietnam, and, most notably, Bangladesh (at $162.1 million).
Consumer Goods and Miscellaneous Manufactured Products14
Exports of consumer and miscellaneous manufactured products fell by $4.8 billion in 2009. Over 60 percent of the decline was attributable to special provisions, in particular to reductions in the amount of low value export transactions and confidential commodities and in goods of U.S. origin returning to the United States. Once these special provisions are removed, exports of the remaining consumer andmiscellaneous manufactured products fell by $1.8 billion, with over 90 percent of the decline attributable to furniture and bedding, which fell by $1.7 billion last year.
Exports of furniture, other than furniture for medical, surgical or dental use, declined by $1.0 billion in 2009, due to reduced exports to the United States. Exports of seats, other than barber and dental seats, also fell in 2009, down $0.5 billion, again because of fewer exports to the United States.
Exports of toys slipped by $141.6 million, with some 95 percent of the decline attributable to the United States.
Imports of consumer and miscellaneous manufactured products were down $3.5 billion in 2009, with half of the decline attributable to special provisions. After taking these special provisions into account, imports of consumer and miscellaneous manufactured products fell by $1.7 billion. Furniture and bedding, and toys and sporting goods were responsible for the bulk of the decline.
Losses in furniture and bedding were widespread as all but one sub-component of the category registered declines last year; the exception was furniture formedical, surgical or dental use, where imports edged up $2.5 million. The bulk of the declines were in seats and non-medical/surgical/dental furniture, with smaller declines recorded for lamps and lighting fixtures, prefabricated buildings, and mattresses and bedding. Overall, furniture and bedding imports were down $1.2 billion in 2009.
Likewise, all but one of the sub-components of toys and sporting goods fell in 2009, with overall imports of this category falling by $365.8 million in 2009. Toys led imports lower, falling by $158.5 million, while fishing rods, tackle, and equipment increased $5.4 million.
Other Transportation Equipment15
Exports of other transportation equipment expanded by 2.9 percent, or $334.9million, to $12.0 billion in 2009—the only major group to register an increase last year. The advances were all in aircraft and related equipment, with exports up by $776.5million. Partially offsetting the gains were declines in railway equipment, and ships and boats, where exports were down by $244.6 million and $196.9 million, respectively.
The gains in aircraft and related equipment weremainly centred on aircraft (which advanced by $909.0million), supported by a $136.4million increase in exports of aircraft parts. On the other hand, exports of launch gear and ground flight training equipment retracted by $267.0million to limit the overall advance. Sales of aircraft tend to be lumpy, given their long lifespans and high costs. Accordingly, there were no follow-up sales in 2009 on some $292.5million of sales made the previous year to Uruguay, Yemen, and Sweden. However, Canadian producers brought eight new customers into the fold, generating $531.9 million in new sales in 2009 where none existed in 2008. For other existing customers, Canadian producers expanded their exports to Germany (up $320.2 million), Denmark (up $277.9 million), and the United Kingdom (up $138.8million), while exports to the United States declined by $345.2million last year.
On the import side, losses were widespread as imports of aircraft and related equipment fell $1.3 billion, and those for railway equipment, and ships and boats were off by $356.6 million and $300.2 million, respectively.
The decline in imports of ships and boats was dominated by a $304.2 million decrease in yachts and other pleasure craft.
For railway equipment, advances by self-propelled and not-self-propelled coaches were offset by greater losses to imports of locomotives and parts to account for the overall decline in this category.
A $1.4 billion decrease in imports of aircraft accounted for more than the total decline in aircraft-related equipment, as imports of aircraft fell by $1.4 billion. Partially offsetting the decline was a $118.9 million increase in parts imports.
Trade by the Provinces and Territories
Canadianmerchandise trade was down across all provinces and territories, except for imports into Nunavut, where they jumped by 56.2 percent, or $17.9million.
|Exports||Export Growth||Export Share||Imports||Import Growth||Import Share|
|Newfoundland and Labrador||$8,514,000,000||-41.7%||2.4%||$2,642,600,000||-37.4%||0.7%|
|Prince Edward Island||$861,000,000||-2.0%||0.2%||$41,300,000||-65.3%||0.0%|
Ontario was perhaps the most impacted by the global downturn as the province accounted for one third of the total decline in Canadianmerchandise exports in 2009, and nearly one half the total decline in merchandise imports. Overall, Ontario’s exports fell $41.2 billion (21.8 percent) to $147.7 billion, while imports declined by $33.9 billion (14.0 percent), to $208.4 billion (Table 5-2). On the export side, fully one third of the decline ($14.8 billion) came from the automotive sector. Other important declines were centred on machinery and equipment (both mechanical and electrical) (down $5.6 billion), nickel (down $3.0 billion), iron and steel (down $2.9 billion), and energy (down $2.4 billion). Similarly, the decline in Ontario’s imports was greatest in automotive products,machinery and equipment, and energy. Together, these three categories accounted for some 70 percent of the total provincial decline.
Exports from Alberta fell nearly as much as did exports from Ontario (down $40.4 billion) as they dropped 36.5 percent in value between 2008 and 2009. About four fifths of the decline came from energy, with losses fairly evenly split between crude oil and natural gas. As reported earlier,much of the decline related to price corrections in the sector, although volumes also declined slightly too. Imports into Alberta declined by $4.3 billion (19.3 percent) to $17.8 billion. Reduced activity in the energy sector lowered demand for imported iron and steel and their products by $0.9 billion. Electrical and non-electrical machinery and equipment imports fell by $0.7 billion, and imports of motor vehicles were down $0.6 billion from 2008.
Lower energy prices also impacted trade in Newfoundland and Labrador, where a $5.5 billion decline in energy exports accounted for about 90 percent of the overall $6.1 billion decline in provincial exports. Likewise, cheaper prices lowered imports of energy by just over $1.6 billion to fully account for the overall $1.6 billion decline in that province’s merchandise imports.
Across Canada, falling international energy prices affected the energy trade in each province. For Nova Scotia and New Brunswick, energy accounted for between 61.4 percent and 77.9 percent of the decline in provincial exports; with respect to imports, it was behind more than a quarter of the decline in Nova Scotia and all of the decline in New Brunswick. Although there was little impact on the import side, inManitoba, energy accounted for about one fifth of the decline in that province’s exports, while for Saskatchewan it was about one half. In British Columbia, energy was behind one third of the decline in provincial exports and one fifth of the decline in provincial imports. For the territories, energy was behind roughly 90 percent of the decline in imports in the Northwest Territories and for all of the decline in the Yukon.
For Prince Edward Island, exports of fresh and prepared seafood, and fresh fruits and vegetables fell a combined $61.8million to lead that province’s exports lower: P.E.I.’s exports slipped 2.0 percent ($17.1 million) to $861.0 million.
Cereals exports dipped 17.6 percent in Manitoba and 18.8 percent in Saskatchewan to account for roughly 10 percent of the decline in provincial exports. Wheat accounted for more than half the decline in each province. As well, in Saskatchewan, potash exports were down $2.4 billion to account for a further 30 percent of the decline in total exports for that province.
In British Columbia, the weak U.S. housing market was behind a $1.2 billion drop in lumber exports, while exports of pulp and paper fell by a similar amount.
Together, these three categories were behind slightly more than 30 percent of the decline in provincial exports in 2009.
On the imports side, beyond energy, reductions in machinery and equipment (both mechanical and electrical) and in motor vehicles trimmed between 40 percent and 60 percent off imports to Manitoba, Saskatchewan, and British Columbia. For Alberta, lower imports of these products cut total provincial imports back by 30 percent from 2008 levels.
Finally, in Quebec, export declines were widespread, withmore notable declines in energy, lumber, pulp, paper, plastics, and iron and steel and their products. However, it was in machinery and equipment (down $2.2 billion) and in aluminum (down $2.9 billion) where the cutbacks in exports were the greatest. Cheaper energy prices lowered provincial imports by $9.5 billion, or 61.5 percent of the total.
1. Canadian trade statistics are provided in two basic forms: Customs basis and Balance of Payments basis. In Chapter Four, the analysis of trade with “major partners” used trade data prepared on the Balance of Payments basis. Trade statistics at greater detailed commodity and individual country levels are provided on a Customs basis only. Since Chapter Five examines trade developments in detail, the data in this chapter is provided on a Customs basis.
2. See Canada’s State of Trade 2009 report for more on this.
3. Canada’s merchandise trade is usually reported by what is known as the Harmonized System (HS) of Trade Classification, an internationally defined system for codifying traded products. Within the HS system, trade is broken down into some 97 chapters, also known as the HS 2-digit level. Each chapter is then broken down into sub-categories at the 4-digit level and each 4-digit sub-category is further broken down into individual products at the 6-digit level. This section examines Canada’s top traded products at the 4-digit HS level.
4. HS Chapter 27.
5. HS Chapter 87.
6. HS Chapter 84.
7. HS Chapter 85.
8. HS Chapter 90.
9. HS Chapters 1 through 24.
10. HS Chapters 25, 26, and 68 through 83, except for Chapter 77. Chapter 77 is being held in reserve and presently does not exist in the HS system.
11. HS Chapters 28 through 40.
12. HS Chapters 44 through 49.
13. HS Chapters 41 through 43, and 50 through 65.
14. HS Chapters 66, 67, and 91 through 99.
15. HS Chapters 86, 88, and 89.
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