Trade balances trending down
In 2005, the year before Harper was elected to his first term, Canada posted a trade surplus equal to US$46.1 billion.
Ten years later, the Great White North’s positive balance has shrunk to $10.9 billion which represents a 76.4% drop.
A surplus in 2014 was a cherished development, given that Canada had posted a string of annual trade deficits after the Great Recession kicked off in 2008:
- -$6.1 billion in 2009;
- -$5.5 billion in 2010;
- -$149.5 million in 2011;
- -$8.3 billion in 2012; and
- -$5.2 billion in 2013.
Effects from the feel-good news for 2014 didn’t lasted long. In the first 3 months of 2015, Canadian imports outpaced slowing exports to the tune of a $346.4 million shortfall. Although there was $1.5 billion surplus for the month of January, February’s $449.5 million deficiency was followed by an even more severe $1.4 billion trade loss in March.
Products behind the trade deficits
Oil represents 27.2% of the total value of Canadian exports for 2014. One could make a compelling argument that this year’s dramatic slide in oil prices is a major contributor to pushing Canada’s trade balance back into the red in 2015.
Nevertheless, oil represents $81.3 billion in net Canadian exports during 2014 and a positive balance of $15.7 billion for the first quarter of this year.
Consider the following. Below are the top 10 product categories that resulted in the greatest negative trade balances from 2006 to 2014.
- Machinery: -$34.9 billion deficit in 2014 (up 48.2% from 2005)
- Electronic equipment: -$30.5 billion (up 117.7%)
- Vehicles: -$10.8 billion (up 203.1%)
- Medical, technical equipment: -$6.7 billion (up 30.1%)
- Iron or steel products: -$6.6 billion (up 247.5%)
- Pharmaceuticals: -$5.4 billion (up 34.3%)
- Alcoholic beverages: -$4.3 billion (up 221.8%)
- Furniture, lighting, signs: -$4.3 billion (up 586.2%)
- Knit or crochet clothing: -$4.3 billion (up 153.2%)
- Fruits, nuts: -$4 billion (up 103.9%)
Imports of foreign-made computers and optical readers under were the greatest deficit-creating drivers under the machinery category, far ahead of heavy machinery (bulldozers, excavators, road rollers).
Canada also has money-losing disadvantages when trading phone system devices, insulated cable wire, television receivers and monitors under the electronic equipment category.
As for vehicles, Canada ran a $17.2 billion surplus exporting cars which was undercut by an $11.4 deficit for imported trucks and a $9.8 billion deficit for imported automotive parts and accessories.
All told, these top 10 product categories in 2014 generated a -$111.8 billion deficit –- a shortfall that eclipses the $81.3 billion surplus from Canadian oil.
Let’s look at Stephen Harper’s international trade record from a big-picture perspective. Among the 96 product categories in which Canada traded globally in 2014, only 31 produced a surplus compared the countries with which it does business.
So while declining oil prices may play a limited and short-term role in driving Canada back into a trade deficit, that Harper’s international trade record blemishes aren’t all about falling oil prices and external forces beyond government control.
This story is about a loss of competitive advantages in trading Canadian goods to faster-improving countries in the global economy.
Research Sources:
Statistics Canada, Imports and exports (International trade statistics). Accessed on July 18, 2015
Canadian International Merchandise Trade Database. Accessed on July 18, 2015
Industry Canada’s Trade Data Online (TDO). Accessed on July 18, 2015
Trade Map, International Trade Centre, www.intracen.org/marketanalysis. Accessed on July 18, 2015