Come What Maple

Canada, like the US but smaller. That’s what many of my friends think and, for sure, the country sits in the shadow of its southern neighbour. Even Canadian sources compare Canada’s performance with the US.

It does not help that Canada has its own version of the Bush family, current President Trudeau, being an embodiment of this. You don’t have to look far to see further support for the little America view. Canada has just legalised Cannabis, following in the footsteps of some American states.

A more objective view reveals that Canada has made considerable strides in joining a number of trading groups spurned by the US. Also it has signed a good number of bi-lateral free trade agreements, one of which is the increasingly admired free-trade agreement with the EU.

In contrast, Canada has recently experienced ‘betrayal’ by its closest trading partner, the USA. The US imposed tariffs which, despite recent agreement on a new trade deal, are seemingly, temporarily still in place. Canada is country where, not for the first time, the British gave the French a good hiding. As a result, Canada retains close links culturally to the UK despite its part-French heritage.

Canada received its independence from the UK in 1867 becoming a self-governing Dominion of the British Empire. However, it was not until after the First World War that Canada set its own foreign policy and defence policy. Indeed it was not until 1931 that its equality with the UK was recognised and not until 1932 that its independent constitution was accepted, all be it with the British monarch as its constitutional head.

Today, Canada’s economy ranks 10th in the world although closer to 20th when measured per capita. The importance of primary products, particularly logging and oil, to the economy is unusual for a developed western economy.  With the world’s largest coastline, the fishing industry ranks 8th in the world.

Like most developed economies the service sector is the single largest sector of the economy and provides 75 per cent of employment and approximately 70 per cent of GDP with industry generating 27 per cent and agriculture close to 2 per cent of GDP.

No discussion of Canada can be possible without understanding the country’s close relation with the US. The US is Canada’s single largest export market and the US is the largest supplier of product to Canada. The two countries have more trade across the one bridge between Ontario and Michigan than Canada’s entire trade with Japan.

Over the years, as much two-thirds of Canada’s imports have come from the US and three-quarters of it’s exports have gone to the other way. Canada supplies the US with 17 per cent of its imports and is the US’s largest energy supplier.

It is the US’s largest supplier of pulp and paper; the US’s fifth largest source of direct inward investment and the fifth largest investor in the US. President Trump’s desire to change the relationship with Canada to a bi-lateral one, outside membership of the North American Free Trade Agreement, appears to be mostly on track albeit a bit behind its target date of 1 October.

This new relationship will be unlikely to change the crucial closeness of the two economies significantly. I would suggest that it might be an error to be found to be in breach of any US imposed sanctions as this could rebound in dealings with Canada.

There will also be a renovated trilateral deal including Mexico and the US; renamed the US-Mexico-Canada Agreement (USCMA), the deal updates the 1994 NAFTA, promising to lead to “freer, fairer markets and to robust economic growth” – this is largely set to impact the Canadian dairy and automotive industries with any agreements set to come into effect in 2020.

UK’s trade with Canada is much less significant than that of the USA but the UK is, by far, Canada’s most important commercial partner in Europe and is Canada’s fifth largest trading partner globally. Under the Canada-EU Comprehensive Economic and Trade Agreement (CETA) signed in 2017, the UK’s industries and consumers will continue to enjoy advantages of almost free trade while Brexit is negotiated and after exit from the European Union.

Despite the UK’s membership of the EU, the historical relationship between the UK and Canada – plus Canada’s preferential trade relationship as one of 53 Commonwealth countries – has contributed strongly to the UK’s preferential trade ranking. The UK is the fourth largest direct investor in Canada. Gun control and licensing is covered by a federal act, although half of Canada’s provinces chose to administer this themselves.  Gun laws follow familiar lines.

Certain firearms do not require a licence, some do and some are tightly controlled or banned. Categories are defined by overall length, barrel length, action (automatic or semi-automatic), velocity and calibre. Ownership by household is less than a third of that in the US.

As a country with which to do business, Canada is advanced, friendly and open to trade.  British names, brands and products are well-received and the nostalgia for some British goods, outside the areas of French influence, is considerable.

Exporting guns to Canada is strict but clear and openly controlled. Other field sport products are more easily traded of course. As in most international trade, a relationship with an agent can be extremely helpful and help avoid first-time pitfalls. The future for the Canadian market looks well-set.

A recent report by Credit Suisse says Canada will experience more than a 50 per cent growth in the number of dollar millionaires in the next five years, a faster rate than that predicted for the US and one that puts Canada alongside China. Canada is growing well. One significant advantage for exporters and importers: Canada’s trade with the UK is very unlikely to be changed negatively by Brexit in quantum or process. Time spent developing this trade will not be wasted.

Tagged with: , , , , , , , , , , ,
Posted in Comment
Follow Us!