Canada’s Trade Revolution
It’s happening. We’ve been talking about it for generations – possibly our entire history, but it’s now a reality. It’s transforming the way Canadians are doing business, and gaining momentum. It could become the dominant force in the Canadian economy in just a few years, and it could easily catapult our nation’s potential growth to a new level. What’s happening? In a word, diversification. Canadians are doing business with non-traditional customers, and this business is growing at a furious pace.
How did it start? Suddenly, we couldn’t make as much money in our default export market to the south. In 2003, the Canadian dollar started to appreciate against the greenback – not just by small amounts, but 8 to 9 per cent a year. That’s enough to level margins, and then some, depending on the industry. This went on for five consecutive years. Exporters to the United States had to act, and fast. Knowing that they had great products, they started hawking them in other parts of the planet, and they found ready buyers. Here’s proof: while total merchandise sales to the U.S. grew on average by 0.7 per cent annually between 2001 and 2008, sales to non-traditional markets rose on average by 12.3 per cent every year. What used to amount to 5 per cent of our exports quickly became over 11 per cent.
This phenomenon was pervasive. It swept across a vast range of industries, each of Canada’s provinces, and it touched all the major regions of the world. In short, it’s a development with sufficient experience and a wide enough reach that it can safely be called a trend. Pretty impressive for a small open economy with a huge dependence on one export market.
Canadian exports and investments to emerging and other non-traditional markets could amount to half our trade by 2025.
We have more going for us. Canada has an army of trade commissioners positioned around the world, with knowledge of the markets they are in and connections that could be very beneficial to small and large companies alike. For those willing to venture into unfamiliar territory, there are a bevy of risk-mitigating finance and insurance products to assist. In addition, trade is high on the current government’s agenda, as demonstrated by ongoing initiatives on a number of fronts aimed at facilitating trade in a broader arena.
Will the trend continue? If it does, non-traditional activity is poised to rise to one-quarter of Canadian trade by 2020. If momentum grows, it could be as much as half of our trade by 2025. It’s a movement many are caught up in, but there’s plenty of room to join. Go for it!
– February 19, 2012