The reality is that we still need to diversify our trade networks away from the US. We tend to just hit the 'easy button' and sell to the US, which is dangerous...
From 2018...
The urgent need for Canada to diversify its trade
Canada needs to diversify its trade beyond the United States and increase our links to rapidly-growing emerging market economies, particularly in Asia.
With the difficult renegotiation of the trade agreement with Canada’s largest trading partner
now resolved, it’s time for Canada to get serious about trade diversification.
The experience of renegotiating NAFTA — or USMCA as it is now called — has highlighted Canada’s vulnerability to one dominant trading partner that buys
roughly 75 per cent of our exports.
As a country, we should not be in this position. We need to diversify our trade beyond the United States and increase our links to rapidly growing emerging market economies, particularly in Asia, despite the “anti-China” clause in the USMCA.
Given that growth has pivoted to these emerging markets in the last 15 years, the first question is why has this not happened already. The answer is straightforward.
For a long time, being right beside the United States — the biggest, richest market in the world — has been a great ride for Canada. What’s more, we’re very comfortable and good at doing business with Americans.
Fewer benefits of living next to U.S.
So why diversify? The short answer is being right next door to the United States is not the ride it used to be. Part of this is the alarmingly protectionist sentiment of U.S. president Donald Trump’s administration, but the root of the answer pre-dates Trump.
In the last 15 to 20 years, the United States has not been the engine of global growth that it was in the past. The U.S. share of global growth has been almost cut in half in the last two decades, falling from about 32 per cent in the 1990s to about 17 per cent in this decade. Over the same period, Asia’s share has risen from 32 per cent to just over 50 per cent, according to our analysis of World Bank trade data from the
Institute for Competitiveness & Prosperity. This has created a double challenge for Canada.
First, we are
significantly underexposed to emerging market economies, so we are getting little upside from their acceleration in growth.
Canada needs to diversify its trade beyond the United States. Read more about how Canada needs to diversity trade, particularly in Asia.
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