Bilateral Trade With Asia, Aggregate

Canada generally runs large merchandise trade deficits with Asia Pacific. A regional trade deficit is not necessarily problematic, however, as we continue to run healthy bilateral surpluses with other trading partners and our current account remains positive. In 2010, both imports and exports increased – by 9.8% and 12.7%, respectively. Australia, Bangladesh, India and Singapore are the only economies that had a decline in exports, -2.3%, -5.2%, -1.7% and -20.8% respectively, in 2010. Our imports to Asia Pacific in 2010 - with the exception of Australia, Malaysia, New Zealand and Singapore - increased in 2010.

Source: Trade Data Online. Industry Canada. 12 March 2011. www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/home
Reproduced with the permission of the Minister of Public Works and Government Services.

Canada’s trade with Asia is quite volatile. There are some simple explanations for this variability, however, relating to the composition of our trade. Canadian exports to Asia feature a relatively heavy reliance on natural resource-based items, especially wood, and agricultural goods, and on big-ticket, infrastructure-related items like telecommunications equipment and aircraft. Sales of the first class of goods, which tend to be priced in relatively competitive markets, may be buffeted by sudden changes in competitiveness induced by exchange rate adjustments, or by the imposition or removal of a regulatory barrier either by Canada, by a customer, or by a competitor. Sales of the second class of goods are, by their very nature, quite lumpy, and sensitive to prevailing business conditions. On the import side, we source a considerable portion of our electronics purchases from Asia, including computers and computer components, semiconductors, and so forth. This sector also experiences considerable variation in demand, and that is reflected in our import demand. A final explanation has nothing to do with the composition of our trade. It is that Asia is in the midst of a process of integration, both within the region, and in the case of certain countries like China, into the global trading system. As investment flows shift and regional production structures adjust, our trade relationship with the region is very likely to experience some variability from year to year.

Source: Trade Data Online. Industry Canada. 16 March 2011. http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/home
Reproduced with the permission of the Minister of Public Works and Government Services.