« Asymmetric Redeemability question: if the Fed pegged to the loonie? | Main | From gold standard to CPI standard »


Feed You can follow this conversation by subscribing to the comment feed for this post.

No surprise that exports to China have grown. But I am really surprised at how much exports to the UK have grown, and that UK is the second biggest customer! Bigger than Japan, or Germany. I wonder what we are exporting to the Brits? (Father always used to complain about Canadian wheat and cheese coming in, competing against British farmers.)

I'm surprised at the growth in UK trade also. I suppose its a case of the empire strikes back!

Bombardier has several British plants, I believe that would account for a fair bit of it. Food too, I believe. Canadian wheat has a very high gluten content and is sold worldwide on this basis, it's a "hard wheat" at 13% which bakers prefer, European wheat is "softer" at 9%. Domestic British wheat is mediocre for breadmaking.

One summer I worked at an avionic manufacturer which was French-owned and therefore had a significant amount of French business ties.

Though the US has probably become a saturated market for us, we won't get much further there and there is no growth potential unless you're selling oil, and that's doubtful at times.

Currency movement no doubt have a part to play too.

Determinant: "Domestic British wheat is mediocre for breadmaking."

I remember my father having (mild) rants on that subject, saying the bakers were just too lazy to do it right. Sorry. Getting off-topic.

But the big increase might well be Bombardier.

On the increased in trade with the UK: with the EU, goods imported into the UK may not stay in the UK - this could be goods shipped to Britain and then trucked elsewhere in the EU.

That may or may not be relevant, Frances. I have done shipping, intermodal shipments like that are just another leg in the haul, the shipper/receiver will still have to negotiate insurance and delivery terms. The term "Freight on Board" is legally relevant, it states where the receiver officially takes delivery, often the municipal line of the shipper's place of business.

The shipment may land in the UK but it Statscan is tracking invoices, the shipment should be credited to Germany, France or Austria, depending on who pays.

“We cannot be in a situation where really our one and only energy partner can say no to our energy products”

Question is, is this truly a shift in strategy, a ruse to compel the Americans to give the go-ahead to the Keystone pipeline, or a bit of both?

My guess is the latter. Harper is the kind of strategist who likely tries to accomplish more than one thing at a time,

"Determinant: "Domestic British wheat is mediocre for breadmaking."

I remember my father having (mild) rants on that subject, saying the bakers were just too lazy to do it right. Sorry. Getting off-topic."

How did he explain the awful cars? There is a series of UK based mysteries where the wealthy businessman always has a tight alibi - 'Couldn't have been me, old chap, I have my regular weekly appointment with my mechanic on Tuesdays'.

"trade to the United States over the period 2002 to 2011 is down in absolute values – a 4.4 percent drop."

I'm gobsmacked by the figures....and am still trying to get my head around them. I notice that the figures are in current dollars; ten year ago the Canadian dollar was somewhere below $0.65 US. That means that if we were selling the same goods to the US that we were selling ten years ago for the same USD price, we should see our US exports fall by about 40%, shouldn't we?

Put another way, I'm wondering how much of the lack of growth in exports to the US reflects the impact of slower US growth and how much reflects the impact of a historic exchange rate appreciation. Looking forward, do we think both of these trends are equally likely to continue?

The UK export data is a funny one : it's almost 100% about gold. In 2002 Canada exported 7.7 M grams of gold to the UK, at an average price of 15 C$/g, for a total of 116 M dollars.

In 2010 it was 211 M grams of gold to the UK, at an average price of 40.2 C$/g, for a total of 8.5 B dollars.

The other biggish shifts are still much smaller (aircraft and uranium both increased in trade value by a little less than a billion dollars over that period, though the former dropped off in a big way in 2011).

Sigh. I hate it when I do that.

That should read "UK export data are funny ones".

Great comment, ZBP -- GOLD...

I'm sure that Simon's exchange rate note is relevant -- much wheat and other non-fuel goods from Canada are easily substitutable with US products, depending on the exchange rate. I wouldn't be surprised if there weren't many areas, possibly including wheat, where exports to the US dropped even more than 40% due merely to exchange rates.

And, isn't that the theory of lower exchange rates? The country with weakening currency (the US) imports less, other things being equal? So, no surprise.

But the (generally popular in Canada) Obama policy of not buying Canadian oil is really really dumb; oh, right, he's from Harvard.

Regarding the exchange rate, what is interesting is that while the absolute value of imports from the U.S. has grown 1.1 percent from 2002 to 2011, apparently our share of imports from the United States has also been dropping. While an appreciating dollar might explain in part the decline in our exports to the United States, I'm not sure why we would import less from the United States with a higher dollar.

In my career I've seen Ontario/Québec manufacturers for st-steel vessels/tanks shipping their products all over the world. Then, our dollar start raising to a point where the Americans manufacturers where cheaper than here. That's around 2008.

My last project at Molson in Toronto (2011) saw all those huge tanks imported from Germany, not the US.

Germany has a large advantage on exchange rates because they are part of a weaker Euro area. If the Germans were on their own, their money would be worth much more than the Euro.

I think that's part of the reason we import less from the US with a higher dollar.

And here I thought Harper was going to opine that 'culturally superior' Canadians can no longer afford to appropriate resources from Aboriginal communities....

Or that Canada can no longer afford to subsidize the overharvesting of fish like it is hellbent on an ethnic cleansing program.

Or that Harper was going to cut lose some of the really nasty regional constituents that support his party.

Who would have thought that a culturally superior and extremely righteous mind-set would have trade repercussions?

I'm skeptical that China will replace the United States as our leading partner, even in a century-long scale. In order to get anywhere close, China will have to continue to grow rapidly, and thus demand our raw materials.

However, China's growth is likely to exacerbate positional tensions between the east and the west. Remember that Britain was only Canada's leading trading partner ca. 1900 as a result of the tariff barriers and imperial preferences. Those same kinds of policies (or even the risk of them) are likely to work against China.

Additionally, as China advances technologically, the Chinese will represent an increasingly strong competitor to Canada's manufacturing and even high tech industries. What you could get politically is a replication of the old continentalist-imperialist political divide, but with the parties reversed. The Tories, representing the resource producing hinterland would be pulled towards China, while the Liberals/NDP, representing the core regions, would be pulled towards the US (reversing the alignment preferences of both parties).

I doubt politics will overcome geography. Only Canada and Mexico can engage in the frequent, low-cost bilateral trade with the US that land borders make possible.

Speaking of the old National Policy, if you read the latest biography of John A. Macdonald it is clear that the National Policy wasn't just a case of nation-building and a plan to integrate the West into the East, it was explicitly a case of government economic intervention to relieve the distress caused to the new working class in urban Ontario & Quebec due to the Long Depression. It was the 19th Century form of stimulus; protective tariffs and national manufacturing policy were the acceptable ways to discuss and implement government intervention in the economy it was clearly a case of intervention against the Long Depression.

That chapter is a fascinating read.

hosertohoosier and Determinant: Thanks.Two interesting observations that I will try to work into my Québec,Canada,régions course.

Chapter 19 of Richard Gwyn's second volume contains the relevant analysis. It is clear the Gywn wrote his books in the shadow of the Collapse of 2008 so he assumed a reader would be interested in economic crisis parallels from earlier times. But the standard narrative is that the National Policy was to allow the East to benefit from the West's development through the CPR so we could have our "fair share". But Gwyn turns that on its ear, rightly so. The National Policy was politically viable because it explicitly intended to create jobs for unemployed Easterners.

Farmers (usually free traders until now) voted for the National Policy because their sons and other close family lived in cities were suffering from the Long Depression. Macdonald was therefore able to move farmers away from the free-trade Liberals into the protectionist Tory camp.

The comments to this entry are closed.

Search this site

  • Google

Blog powered by Typepad