International trade is critical to Canada’s economic growth and prosperity. While new export opportunities are opening up, the escalation of trade tensions and increasing uncertainty about the global economy also make trade more complex and unpredictable – to the extent that many Canadian companies consider it too risky.
EDC believes the rewards of exporting far outweigh the risks. Part of our role is to help Canadian companies anticipate and manage those risks and to seize export opportunities as they arise. We see numerous openings in the current trade environment.
While Canadian companies typically export to the U.S., diversification beyond traditional markets presents significant opportunities to mitigate concentration risk and grow.
The relentless growth path of emerging markets will see them capture a greater share of global GDP over time. Leveraging this growth will increase the long-term potential of Canadian exporters by increasing their share of Canada’s total exports over time.
Canadian direct investment abroad
By establishing a local presence in global markets, direct investment abroad enables Canadian companies to overcome trade barriers, expand their reach and acquire new buyers and opportunities, thereby hedging against risk.
Free trade agreements
The CETA eliminates 99 per cent of tariffs for Canadians exporting to the E.U. and places Canada in a unique position to become a supply chain leader in Europe. Once in full force, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will give Canadian companies access to nearly 500 million consumers in the region. Add this to the nearly 500 million consumers we gain access to through CETA and the 500 million consumers we can reach through the new Canada–United States–Mexico Agreement (CUSMA) and Canada’s free trade zone grows to 1.5 billion consumers.
Behind the maple leaf is a reputation for being reliable, responsible, innovative producers of quality goods and services, making Canadian companies ideal international trading partners.
With fears that the global economy is inching closer to a recession, Canada isn’t immune to the risks associated with a possible downturn.
Top 10 global risks
In 2019, EDC’s economics team released a list of the top 10 global risks facing Canadian exporters over the next five years. The top three were America First policies, the threat of a global recession and global protectionism. A summary of the report is posted on our website.