Trade in Services

Canada and Trade in Services

The past decades have seen a broad structural shift towards services in the Canadian economy. Services have increased from just over half of Canada's gross domestic
product (GDP) in 1961 to two-thirds today. The percentage of workers employed in services is also on the rise. It employs about three Canadians in four - compared to just over half in 1961 - and between 1990 and 2006 services created more than 90 percent of new jobs and in 2006, 331 thousand new jobs were created in the services sectors, while about 16.5 thousand jobs were lost in the goods sector.

Services are, on balance, more knowledge-intensive than other sectors and therefore employ proportionately many more well-educated workers than other industries. For example, almost 20 percent* of workers in the services sector have post-secondary education. Interestingly, some of the best-paid jobs in Canada are in the services sector - in financial, legal, advertising, computer software and engineering services.

Services Trade

• Cross-border exports of services totalled $65 billion in 2005, representing about 12.5 percent of Canada's exports. At the same time, Canada imported $78.7 billion of services.
• In addition to cross-border exports, many services are delivered through affiliates set up in foreign countries to sell services directly to foreign customers. In 2004, sales by foreign affiliates of Canadian services firms were $122 billion, twice the amount of cross-border services exports (given data limitations statistics on foreign affiliates trade may be undervalued).
• The share of services exports relative to GDP rose steadily during the 1990s. Canada's services exports represented 4.7 percent of GDP in 2005, compared with 3.3 percent in 1990. Services imports have also expanded from 4.9% in 1990 to 5.7% in 2005.
• The United States remains Canada's principal trading partner in services, accounting for 55.2 percent of Canada's total services exports in 2005 (compared with 81 percent of goods exports) and 57.6 percent of Canada's services imports. Between 1990 and 2005, services exports to the United States grew at an annual rate of 7.2%, outpacing that for imports of 5.3%.
• Services trade in the NAFTA region has been growing steadily. Canada’s services exports to its NAFTA partners were $37 billion in 2004 while we imported $46 billion worth of services. 98% of this services trade was with the United States.
• Canada is among the largest services exporters in the world. In 2005, Canada was the 15th largest services exporter in the world.

Canada and Key Services Trading Partners

• Canada’s other trading partners figure prominently in the services picture. In 2003, the European Union purchased about $4.9 billion of Canadian services and at $1.9 billion in 2005, Japan is the third largest purchaser of Canadian services. Japan accounts for about 25.6% of Canada’s total service exports to the Asia-Pacific and is by far the largest purchaser of Canadian services in the region.
• Our services exports are less dependent on the U.S. market than is the case for our goods exports, and our fastest-growing export markets are elsewhere. Between 1990 and 2004, for example, commercial services exports to Brazil grew by 23.5 percent annually; and to China by 16 percent.

Source: Foreign Affairs and International Trade Canada website (Office of the Chief Economist webpage)

* 2005 data for United States and European Union is available. 2004 data was used because more recent data is not available for “Other Countries”.

Sectoral Focus: Commercial Services

• Commercial services exports are the most important and fastest growing sector of services exports for Canada. Creating high-paying jobs in knowledge-intensive industries such as architecture, engineering, research and development services and financial services.
• In 2005, commercial services accounted for 54 percent of services exports and 48 percent of services imports—the largest share of Canada's services trade.
• Exports of commercial services have grown by 9.4 percent since 1990 to total $35.1 billion in 2005.

Source: Statistics Canada, Canada's International Trade in Services, Catalogue no. 67-203-XWE,

*1998 is the latest date for which data is available