March/April 2011

Supply Side

Canada’s future well-being will depend heavily on exports

By Jon Baird

According to an article in the January 19, 2011, issue of Embassy – Canada’s Foreign Policy Newsweekly, Statistics Canada says that when the recession started, Canadian export earnings fell by 30 per cent in less than six months. This unparalleled collapse in exports came in the context of tumbling global trade flows.

The bite of the recession in Canada was reduced by government “stimulus” spending and, fortunately, by consumer spending. However, the gushing stimulus taps will have to be turned off sooner rather than later if the deficit is to be reduced. As a result, the economy will again turn to export growth as a means to sustain its recovery.

Keep in mind that exports account for 30 per cent of our GDP. It is estimated that the recession-led drop in exports accounted for a two per cent reduction in GDP growth. Further, while parts of our economy have recovered, exports are still well below pre-recession levels, although they are expected to rise this year.

But, growing exports will be difficult. Our dollar is expected to remain strong and our biggest trading partner, the United States, with which our trade is highly integrated, continues to see slow growth.

European countries have announced export stimulation programs. At mining trade shows, we will see the competitive effects of these national efforts, just as we do with the well-organized Australian export drive.

In March 2010, the Obama administration launched its National Export Initiative, a strategy aimed at doubling U.S. exports in five years. The aim of the program is to help American firms enter new markets, assist them with export financing and advocate for them abroad. The U.S. Embassy has ramped up its hosting of business delegations to Canada.

But what are we doing? The Export Development Corporation (EDC) is more active than ever in stimulating exports. Not only do they continue to provide essential financial services and solutions for exporters, but they are widening their range of informational products and marketing promotional activities. The Trade Commissioner Service, as always, is an excellent ally, but is currently understaffed and underfunded.

While multilateral trade talks at the World Trade Organization have stagnated, Canada is pursuing bilateral agreements that will make Canadian exporters more competitive in selected countries.

Our sectoral and multi-sectoral efforts such as the Team Canada missions of a few years ago have disappeared. Federal government export assistance programs such as Brand Canada and Program for Export Market Development (PEMD) have been shut down.

In the wake of a weak and misguided foreign policy, including that on the environment, respect for Canada in the world is diminishing to the point that we were embarrassed in losing a UN Security Council seat to Portugal. If people do not respect us, will they buy from us?

However, if Canada really wants to expand and diversify markets, then export promotion abroad becomes very important. We need the federal government to place a fresh emphasis on collective ways, as a nation and as industry sectors, through which we can better promote ourselves as a high-quality, reliable and competitive provider of goods and services to the world.

Jon Baird
Jon Baird, managing director of CAMESE and the immediate past president of PDAC, is interested in collective approaches to enhancing the Canadian brand in the world of mining.

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