Canada: Trade Prospects Growing

Economic Review, February 1993 | Go to article overview

Canada: Trade Prospects Growing


Canada is a major trading nation, growing from the tenth to the eighth largest trading nation between 1979 and 1990. Canadians are successful traders; exports of goods and services make a significant contribution to Canadian economic growth, accounting for about a third of total output.

Canada's dependence on trade for its prosperity is underlined by the fact that more than 40 per cent of its domestic manufacturing output is exported. In 1990, Canada also exported 38 per cent of its agricultural output, 80 per cent of its fishing catch, 46 per cent of its forestry products, and 80 per cent of its mining output.

The composition of Canadian trade has also changed significantly over the years. Exports have shifted gradually away from agriculture, energy and other resource products towards more fully processed goods. From 1960 to 1990, manufactured exports grew from under 10 per cent to over 40 per cent of total exports.

In the early 1980s, export growth was led by automotive products to the United States. Since 1985, however, real growth in exports of other manufactured goods has outfaced automotive products. Substantial increases have been recorded for chemical, machinery and rubber exports all sectors that were net importers in the 1960s.

The most successful sectors of the economy - in terms of wages, profits and output - continue to be those that are well integrated into the global economy, such as forest products, engineering and transportation and communications equipment.

Since 1960, Canada has maintained a sizeable trade surplus and merchandise trade has grown faster than world trade. Canada increased its export orientation from 15 per cent of output in 1960 to about 30 per cent today, which is comparable to Germany and well above the United States at 10 per cent and Japan at 14 per cent.

Canadian trade with Pakistan has been modest - two-way trade amounts to less than $200 million annually. However, the economic reforms introduced by the Government of Pakistan are opening up opportunities for a higher profile commercial relationship. Historically, Canada's principal export to Pakistan has been coal ore in the order of $10 million. Canada also regularly sells specialized aluminum conductors for power transmissions, power generation equipment, pulp and paper, plastics, iron and steel, communications equipment and locomotive spares.

While Pakistan's exports to Canada are not large, they have almost quadrupled in value over the past six years. In 1985, Pakistan exported $30 million to Canada. By 1987, Pakistan's exports had risen to $62 million and in 1991, they totaled $115 million, a truly remarkable growth over a short period of time. About 80 per cent of Pakistan's exports to Canada are made up of cotton, textiles, and manufactured garments.

Oil and Gas Industry

Oil and Gas is at present the most active commercial sector for Canadians in Pakistan. To date, seven Canadian oil exploration companies have operated or held shares in petroleum concessions in Pakistan. Other firms have demonstrated strong interest in Pakistan, especially since the release of the Government of Pakistan's Petroleum Policy last November. Todate, the Canadian oil and gas industry has invested $50 million in exploration activities over and above the $130 million which the Canadian International Development Agency has committed to assist OGDC in developing its exploration and production capacities.

Canada's oil and gas industry is concentrated in the province of Alberta and is therefore easily accessible by Pakistani firms. The Canadian industry is well suited to the stage of development of Pakistan's petroleum sector. Most Canadian oil and gas equipment manufacturers are small, specializing in high quality machinery and equipment used in exploration, drilling and servicing oil and gas wells and in the production, transmission and processing of oil and gas.

The Canadian oil and gas industry is export-oriented and has shown a great deal of interest in doing business in Pakistan. …

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