Canada losing ground in trade with the U.S., but exports to others fills gap

Stevedores move shipping containers at the Fairview Cove container terminal in Halifax on Feb. 11, 2009. Canada's trade deficit narrowed in October as export growth outpaced a rise in imports. THE CANADIAN 

PRESS/Andrew Vaughan

OTTAWA - Canada's trade surplus with the United States has fallen to its lowest level in almost two decades in a further sign the cross-border relationship is becoming less critical to both economies.

Meanwhile, October' trade report from Statistics Canada shows Canadian exporters are increasingly making inroads in Asia and Europe, opening up promising new markets.

Overall, October was a good month for the economy, with the trade deficit falling by $600 million to $1.7 billion as exports rebounded by 3.1 per cent, Statistics Canada said.

Analysts said the export bounce, after several months of weakness, will likely mean economic growth resumed again during the month, after a tiny dip in September.

The bigger surprise was that Canada's exporters made such gains with little help from their standby markets in the U.S.

The value of shipments to the U.S. edged up a mere 0.4 per cent, slicing the Canada's surplus with its southern neighbour to $1.1 billion, the smallest in more than 18 years.

Meanwhile, exports to the rest of the world shot up by 10.1 per cent, helping to reduce the monthly deficit by almost $1 billion to $2.8 billion.

"I think it's the most exciting thing that is happening in the Canadian economic landscape," said Export Development Canada economist Peter Hall.

And it's not just oil and minerals, he added. Although the volumes are small compared with overall trade, Canadian value-added exports to countries other than the U.S. in machinery, auto parts and office equipment are growing strongly as well.

"There is a growing diversification," he said. "What we're seeing is that there are not a lot of industries being left out. It is very encouraging."

Canada's most important trading relationship and market remains the U.S., and here the trends are not so encouraging.

Canadian shipments to the U.S. now account for 70 per cent of overall exports, the lowest portion in 28 years, while Canadian goods now represent only 14 per cent of U.S. imports, a record low that is down from 20 per cent just nine years ago.http://www.canadianbusiness.com