Is Canada the Principal Trade Partner for the US?

On behalf of the Government of Canada, it gives me great pleasure to submit the Canada's State of Trade 2020 report as Minister of Small Business, Export Promotion, and International Trade. This report acknowledges the enormous global uncertainties of 2020 during the COVID-19 pandemic while providing Canadians with an overview of our economic actions in 2019. Our companies have proven to be incredibly adaptable and creative in their approach to overcoming obstacles.

This research demonstrates how Canadian ingenuity

and tenacity have enabled our companies to stay competitive in the international market, as well as our government's dedication to fostering trade throughout difficult times.

We are regarded as one of the greatest locations in the world to invest in and launch a business, and as a powerful, stable, and trustworthy trading nation.

However, pressure is mounting on global supply networks now more than ever. Because of this, our government has recommitted to exploring new avenues for better serving and assisting Canadian business owners and entrepreneurs in their endeavors to prosper in the international marketplace through the Export Diversification Strategy. Market opportunities are expanded and diversified by free trade agreements like the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Canada-United States-Mexico Agreement (CUSMA), popularly known as the new NAFTA.

We will continue to collaborate with our foreign partners as we seek economic recovery, and we will assume a leading position in maintaining open supply chains, bolstering and broadening trade ties, and promoting rules-based commerce for the twenty-first century. In order to maintain rules-based commerce and provide our companies with the stability they require to expand internationally, we must fortify multilateral organizations like the World commerce Organization.

For this reason, opportunities for Canadians and Canadian-owned enterprises will be created by our administration coast to coast.

synopsis

As of now in 2020, the COVID-19 epidemic is dictating economic events. The economic growth that started in mid-2009 in the wake of the global financial crisis of 2007–2008 has come to an end with the ensuing downturn. But even before the pandemic spread to other nations, 2019 was already threatening to be a difficult year for the world economy due to escalating tensions across borders, ambiguous trade agreements between the US and China, and the BREXIT process. Mixed economic signals made these problems worse. As a result, while global trade and investment performance in 2019 either stagnated or slightly declined, the outlook for global economic growth in 2019 was further downgraded, reaching the lowest rate (2.9%) since the recession that followed the global financial crisis of 2007–2008.

In comparison, the pattern of Canadian exports to China, the country's third-largest trading partner, was very different in 2019. Exports of Canadian commodities to China fell precipitously by 16% instead of rising. The trade restrictions China imposed on Canadian food products were the cause of this decline. However, this setback did not accurately reflect China's trading relations with Canada in the 2010s. In contrast to China's 6.6% annual growth in imports, Canada's products exports to China increased by an average of 6.3% between 2010 and 2019.

Canada's top three commercial partners—the United States, the European Union, and China—remain strong trading connections. Thanks in part to free trade agreements, goods exports to the US and the EU increased significantly. In particular, Canadian exports to the European Union are still supported by the Comprehensive Economic and Trade Agreement, which is currently in its second year of provisional application. However, there are signs that Canadian importers and exporters are not making the most of the deal, indicating that more work may be required to promote it.

In comparison to the global results

Canada's trade and investment performance in 2019 was generally strong, although being impacted by the challenging global environment. Nonetheless, Canada's trade figures for 2019 were largely below the country's yearly average for the previous ten years. The effects of COVID-19, a worldwide threat that 2020 brought about from which no nation was exempt, would probably eclipse the 2019 outcomes in the long run and have never before been seen in terms of trade and economic effects.

Every element of international trade was impacted by the containment measures put in place to stop the virus's spread. The early effects of COVID-19 on Canadian trade are evaluated in this year's State of Trade report. The virus first appeared in Asia in January 2020 and moved swiftly to a few European nations in February before affecting every continent, including Canada, in March. Preliminary findings indicate that the effects on trade with Canada were not evenly dispersed. Early effects include a 13% and 26% decline in Canada's goods exports to China and South Korea, respectively, in the first quarter of the year compared to the same period in 2019. Even if COVID-19 cannot be entirely blamed for the decreases, by March 2020, Canadian products imports had increased by 8.4% and exports had decreased by 7.9% overall from March 2019. But the declines were not uniform; some items' exports and imports, along with those of particular trading partners, were severely damaged, while others appeared to be largely unaffected or even improved.

 

The impact of COVID-19 and the sharp reduction in oil prices had a significant impact on Canada's main goods export, energy exports, which fell 21% in March 2020 compared to the same month in 2019. As seen by the drops in automotive product exports and imports (23% and 18%, respectively), machinery (11% and 10%, respectively), and electronics (26% and 13%, respectively), industries that depend on global supply networks were also very badly hit. On the other hand, compared to the previous year, Canada's agricultural exports increased in March 2020. The export of vegetables (49%) and oil seeds (60%) accounted for the majority of the 13% increase in agriculture exports.