Chap 11 - International Trade

Trends in Merchandise & Agri-Food Trade

Inter-regional vs International Trade

language & culturespecialized transport servicesgovernment regulatory differenceshow prices and exchange rates collide

300000

320000

340000

360000

380000

400000

420000

440000

460000

480000

500000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Exports and Imports 2002 - 2010 ($CA Million - current)

Source: Statistics Canada, CANSIM, table (for fee) 228-0003 228-0043

Imports

Trends in Merchandise Trade

Source: Statistics Canada, The Daily

Exports of Goods – $million (current)

2002-06 2007 2008 2009 2010 Exports 429593 463120 488754 369343 404834

Agricultural and fishing products 30483 34738 40859 37238 36938Energy products 70304 91292 125728 79835 90886 Crude petroleum 26728 40997 60970 42503 50111 Natural gas 27126 28071 33046 15749 15619Forestry products 36180 29267 25355 19529 21851

Industrial goods and materials 78682 104776 111321 79145 96489Machinery and equipment 92851 93432 92214 80158 76095Automotive products 88905 77007 61156 43811 56783 Passenger autos and chassis 45477 39989 34076 26287 37603 Trucks and other motor vehicles 16119 13029 7334 3758 2310 Motor vehicle parts 27309 23989 19745 13767 16870Other consumer goods 17439 18738 18172 17935 16428

Source: Statistics Canada, CANSIM, table (for fee) 228-0003.

NB - not all sectors represented in table

Imports of Goods – $million (current)

2002-06 2007 2008 2009 2010 Imports 371074 415683 443777 374081 413833

Agricultural & fishing products 22029 25531 28511 29348 29579Energy products 25914 37299 53173 33951 40549Forestry products 3107 2990 2856 2385 2648

Industrial goods and materials 74077 85352 92088 75068 86926Machinery and equipment 106886 116583 122642 107897 113878Automotive products 78710 79956 71959 55321 68713Other consumer goods 48398 54784 57608 57518 57771

Source: Statistics Canada, CANSIM, table (for fee) 228-0003 228-0043

NB - not all sectors represented in table

$ millions 2002-06 2007 2008 2009 2010 Exports 429941 463120 488754 369343 404834 United States1 351167 355732 370005 271109 296672 Japan 10106 10027 11784 8862 9717 United Kingdom 8860 14152 14029 13046 16986 Other European Economic Community countries 18056 24393 25174 19010 19476 Other OECD2 14479 19744 20749 16691 17908 Other countries3 27274 39074 47013 40626 44076 Imports 371084 415683 443777 374081 413833 United States1 254113 270067 281535 236290 259953 Japan 11113 11967 11672 9329 10067 United Kingdom 9489 9963 11233 8530 9561 Other European Economic Community countries 28162 32404 35461 30241 30788 Other OECD2 21924 25160 27380 25962 29013 Other countries3 46284 66123 76496 63730 74451 Balance 58857 47437 44977 - 4738 - 8999 United S tates1 97054 85665 88470 34819 36719 Japan - 1007 - 1940 113 - 467 - 351 United Kingdom - 629 4189 2796 4516 7425 Other European Economic Community countries - 10106 - 8011 - 10288 - 11230 - 11313 Other OECD2 - 7445 - 5416 - 6632 - 9271 - 11105 Other countries3 - 19010 - 27049 - 29483 - 23105 - 30375

Imports, exports & trade balance of goods, by country

Source: Statistics Canada, CANSIM, table 228-0003.

73%81%

Trends in Agri-Food Trade

Canada as an exporter47% primary (farm) output exported~ $30 - 35 billion $5 - 6 Billion trade surplus

Export markets (2009)United States 50% of agri-food exportsJapan 8%EU 6%, China 7%

Products:grains + products (28%)oilseeds + products (20%), livestock + products (18%)

Source: Agriculture and Agri-Food Canada, An overview of the Canadian Agri-Food System, 2011, Ottawa

4th largest exporter of agr products (2009)

3.4% of world exports: EU (48%) US (11%) and Brazil (6%)

55% Primary1997

52% Primary2009

71% of imports are processed (2009)

Canadian Agri-Food Imports

Imports (2009).

2.8% World Imports

US is largest source (~ 61% ) EU (13%) , Mexico (4%)

Products:fruit & vegetables + processed products (28%)beverages (ex fruit juice) (13%)

Exports vs. Imports

complementary - competitive importsgains from tradeimport sources becoming more diverse

International vs. Interregional Trade

Language and culturecommunications transactions costs (“gifts”)

Transportation requirements

clear rules of transaction

freight costs, load/unload

transfer of ownership (incoterms: EXW, FAS, FOB)

insurance

documentation

Government regulation

International organizations

Facilitate tradeBilateral - regional (NAFTA)Multinational (WTO, Codex Alimentarius Commission)

Transactions Costs

Phyto-sanitary Transport

Food labelling & packaging

Country of originImport/export agencies

Exchange Rates

Two prices in every trade another transaction cost

ER volatility (post 1970’s)

significant effects on trade & profitability

dealing with exchange rates- fixed versus floating rates Canada vs China

- role for forward exchange markets

Canada-US exchange rate - recent history

Jan 2002 (1.60/0.63)

$US per Canadian Dollar 2002 - 2011

Source: Globe & Mail - Globe Investor

60% appreciation

$Euro per Canadian Dollar 2002 - 2011

Source: Globe & Mail - Globe Investor

$US per Euro 2002 - 2011

$US per Chinese Yuan Renminbi 1982 - 2011

China Daily, Oct 27, 2011