(WTO)
The World Trade Report is an annual publication that aims to deepen understanding about trends in trade, trade policy issues and the multilateral trading system.
The theme of this year’s Report is “Trade in a Globalizing World”. The Report provides a reminder of what we know about the gains from international trade and highlights the challenges arising from higher levels of integration. It addresses a range of interlinking questions, starting with a consideration of what constitutes globalization, what drives it, what benefits does it bring, what challenges does it pose and what role does trade play in this world of ever-growing inter-dependency.
The Report asks why some countries have managed to take advantage of falling trade costs and greater policy-driven trading opportunities while others have remained largely outside international commercial relations. It also considers who the winners and losers are from trade and what complementary action is needed from policy-makers to secure the benefits of trade for society at large. In examining these complex and multi-faceted questions, the Report reviews both the theoretical gains from trade and empirical evidence that can help to answer these questions. More information on the report at the WTO website.
Showing posts with label Global Economy. Show all posts
Showing posts with label Global Economy. Show all posts
Tuesday, July 15, 2008
Friday, June 20, 2008
Government of Canada Expanding Trade Opportunities At Home and Abroad
(Minister of International Trade)
Canada is moving along its aggressive trade strategy by establishing 10 new trade offices in three countries and is expanding its Trade Commissioner Service in Canada with four new satellite offices. The announcement was made by the Honourable David Emerson, Minister of Foreign Affairs and International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, during a speech delivered for International Trade Day, in Mississauga.
“Canada is a trading nation. We are expanding our international footprint to maintain Canada’s competitive advantage in key markets, and to bolster our domestic economy and quality of life for all Canadians,” said Minister Emerson. “Today’s announcement is another example of our government’s commitment to keep our economy strong. These new trade offices will help provide our companies with the tools they need to access global supply chains and expand their commercial activities.”
Minister Emerson announced that new trade offices will open in six cities across China (Chengdu, Nanjing, Qingdao, Shenyang, Shenzhen, Wuhan), two in Mexico (Tijuana, Villahermosa) and two in Brazil (Porto Alegre, Recife). These are in addition to two new offices in India (Hyderabad, Kolkata) and one in Mongolia (Ulaanbaatar) announced in April. The government will also add new trade staff to existing offices in Brazil, Chile, China, Colombia, India and Panama.
“Canadian business has been demanding more service in growing markets abroad as well as enhanced local service in Canada,” said Minister Emerson. “Today this government is delivering on our commitment to the business community to improve these services.”
At home, new satellite offices will be established in Kitchener, Ottawa, Victoria and Windsor. Additional trade officers will also be added to existing regional offices.
“These offices play a key role in encouraging small and medium-sized enterprises to seek international opportunities and succeed in new markets,” said Minister Emerson. “Expanding our domestic points of service means more Canadian businesses will be active on the world stage.”
During his International Trade Day speech, Minister Emerson outlined the milestones Canada reached in trade and investment over the past year. The government has vastly increased bilateral ties with Canada’s global partners, in keeping with its commitments under the Global Commerce Strategy. This year, Canada signed a new free trade agreement (FTA) with the European Free Trade Association countries of Iceland, Liechtenstein, Norway and Switzerland.
In addition, Canada signed an FTA with Peru and concluded negotiations with Colombia. The government is continuing negotiations with Korea, the Caribbean Community, the Dominican Republic, Jordan, Singapore and the Central American Four countries of El Salvador, Guatemala, Honduras and Nicaragua, while at the same time looking ahead to possible new initiatives with countries such as Panama.
Canada has concluded negotiation of foreign investment promotion and protection agreements with India and Jordan, and negotiations with a number of other countries are ongoing. Canada also concluded new air agreements with Jordan, Iceland, New Zealand, Singapore, Mexico, Barbados, the Philippines and Panama, and launched negotiations with the European Union for a comprehensive open skies agreement that would govern air services between Canada and all 27 EU countries. Moreover, Canada expanded its work with China and India through existing science and technology agreements. Just last week, our country took another step to deepen and broaden our commercial and economic relations with France with the signature of a Canada-France Joint Action Plan.
“We know that trade follows investment,” said Minister Emerson. “With all these bilateral arrangements, Canada is attaining a stronger position to climb global value chains, increase inward and outward investment, gain preferential market access for Canadian firms and, ultimately, generate prosperity at home.”
The new trade missions are part of the government’s Global Commerce Strategy, which provides $50 million per year to further develop Canada’s trade and investment interests at home and abroad.
Canada is moving along its aggressive trade strategy by establishing 10 new trade offices in three countries and is expanding its Trade Commissioner Service in Canada with four new satellite offices. The announcement was made by the Honourable David Emerson, Minister of Foreign Affairs and International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, during a speech delivered for International Trade Day, in Mississauga.
“Canada is a trading nation. We are expanding our international footprint to maintain Canada’s competitive advantage in key markets, and to bolster our domestic economy and quality of life for all Canadians,” said Minister Emerson. “Today’s announcement is another example of our government’s commitment to keep our economy strong. These new trade offices will help provide our companies with the tools they need to access global supply chains and expand their commercial activities.”
Minister Emerson announced that new trade offices will open in six cities across China (Chengdu, Nanjing, Qingdao, Shenyang, Shenzhen, Wuhan), two in Mexico (Tijuana, Villahermosa) and two in Brazil (Porto Alegre, Recife). These are in addition to two new offices in India (Hyderabad, Kolkata) and one in Mongolia (Ulaanbaatar) announced in April. The government will also add new trade staff to existing offices in Brazil, Chile, China, Colombia, India and Panama.
“Canadian business has been demanding more service in growing markets abroad as well as enhanced local service in Canada,” said Minister Emerson. “Today this government is delivering on our commitment to the business community to improve these services.”
At home, new satellite offices will be established in Kitchener, Ottawa, Victoria and Windsor. Additional trade officers will also be added to existing regional offices.
“These offices play a key role in encouraging small and medium-sized enterprises to seek international opportunities and succeed in new markets,” said Minister Emerson. “Expanding our domestic points of service means more Canadian businesses will be active on the world stage.”
During his International Trade Day speech, Minister Emerson outlined the milestones Canada reached in trade and investment over the past year. The government has vastly increased bilateral ties with Canada’s global partners, in keeping with its commitments under the Global Commerce Strategy. This year, Canada signed a new free trade agreement (FTA) with the European Free Trade Association countries of Iceland, Liechtenstein, Norway and Switzerland.
In addition, Canada signed an FTA with Peru and concluded negotiations with Colombia. The government is continuing negotiations with Korea, the Caribbean Community, the Dominican Republic, Jordan, Singapore and the Central American Four countries of El Salvador, Guatemala, Honduras and Nicaragua, while at the same time looking ahead to possible new initiatives with countries such as Panama.
Canada has concluded negotiation of foreign investment promotion and protection agreements with India and Jordan, and negotiations with a number of other countries are ongoing. Canada also concluded new air agreements with Jordan, Iceland, New Zealand, Singapore, Mexico, Barbados, the Philippines and Panama, and launched negotiations with the European Union for a comprehensive open skies agreement that would govern air services between Canada and all 27 EU countries. Moreover, Canada expanded its work with China and India through existing science and technology agreements. Just last week, our country took another step to deepen and broaden our commercial and economic relations with France with the signature of a Canada-France Joint Action Plan.
“We know that trade follows investment,” said Minister Emerson. “With all these bilateral arrangements, Canada is attaining a stronger position to climb global value chains, increase inward and outward investment, gain preferential market access for Canadian firms and, ultimately, generate prosperity at home.”
The new trade missions are part of the government’s Global Commerce Strategy, which provides $50 million per year to further develop Canada’s trade and investment interests at home and abroad.
Thursday, June 19, 2008
Canada Amongst Top Five “Global Trade Friendly” Countries: WEF Study
(Agence France-Presse)
Hong Kong and Singapore are the two economies most conducive to global trade, according to a ranking by the World Economic Forum released on Wednesday.
The World Economic Forum’s new Global Enabling Trade Index survey of 118 economies looked at ten factors impacting trade, such as tariffs, customs administration efficiency and availability of transport and communications infrastructure.The forum ranked Hong Kong number one thanks to its “very open market” as well as a “secure and open business environment.”
Singapore’s open business environment was also complemented by a “highly efficient and transparent border administration” and a well-developed transport and communications infrastructure.
Third and fourth places were taken by Sweden and Norway respectively, while Canada was ranked fifth.
The world’s largest economy United States, however, did not figure in the top ten, coming in at number 14, dragged down by its border administration, judged to be “lacking some efficiency.”
“Customs procedures (in the United States) are seen as comparatively burdensome (ranked 42nd) and there is a relatively high cost to import (ranked 65th),” said the WEF.
Export giant China fared even worse, ranked just 48th, reflecting “underlying weaknesses in its economy and its trading regime.”
“Above all, China is a fairly closed country. Although its economic success relies heavily on exports, imports are still severely inhibited by tariff and non-tariff barriers, despite the country’s accession to the WTO,” it said.
Fellow Asian giant India ranked even further down the list, at 71st place, due to its market access, which is rated as “severely restricted.”
Brazil was not far behind India, at 80th place, as its markets remain “fairly closed, with tariffs... inhibiting goods imports.”
Hong Kong and Singapore are the two economies most conducive to global trade, according to a ranking by the World Economic Forum released on Wednesday.
The World Economic Forum’s new Global Enabling Trade Index survey of 118 economies looked at ten factors impacting trade, such as tariffs, customs administration efficiency and availability of transport and communications infrastructure.The forum ranked Hong Kong number one thanks to its “very open market” as well as a “secure and open business environment.”
Singapore’s open business environment was also complemented by a “highly efficient and transparent border administration” and a well-developed transport and communications infrastructure.
Third and fourth places were taken by Sweden and Norway respectively, while Canada was ranked fifth.
The world’s largest economy United States, however, did not figure in the top ten, coming in at number 14, dragged down by its border administration, judged to be “lacking some efficiency.”
“Customs procedures (in the United States) are seen as comparatively burdensome (ranked 42nd) and there is a relatively high cost to import (ranked 65th),” said the WEF.
Export giant China fared even worse, ranked just 48th, reflecting “underlying weaknesses in its economy and its trading regime.”
“Above all, China is a fairly closed country. Although its economic success relies heavily on exports, imports are still severely inhibited by tariff and non-tariff barriers, despite the country’s accession to the WTO,” it said.
Fellow Asian giant India ranked even further down the list, at 71st place, due to its market access, which is rated as “severely restricted.”
Brazil was not far behind India, at 80th place, as its markets remain “fairly closed, with tariffs... inhibiting goods imports.”
Thursday, May 29, 2008
High Oil Prices Curb April Air Traffic Growth
(IATA)
High oil prices and economic worries damped demand for international air traffic last month, and cross-border cargo shipment growth was sluggish, the airline industry body IATA said on Thursday.
In its monthly traffic report, the International Air Transport Association said air passenger demand rose just 3% in April on a year-on-year basis, while freight demand growth was 3.7% up on the same month in 2007.
“The impact of skyrocketing oil prices and weaker economies has made its way to traffic growth,” IATA President Giovanni Bisignani said in a statement. “Combine slowing growth with skyrocketing oil prices, and the industry outlook is grim at best,” Bisignani said.
Cross-border air shipments, which IATA measures in freight tonne kilometres, are considered a prime indicator of the health of world trade.
In the first four months of 2008, demand for such cargo shipments was up 3.4% compared with the same period of 2007, a much slower growth rate than in past years. “There has been a step change downwards,” Bisignani said.
IATA represents 240 airlines operating 94% of all international passenger and cargo flights. Domestic flights are excluded from its data. Go here for the IATA report.
High oil prices and economic worries damped demand for international air traffic last month, and cross-border cargo shipment growth was sluggish, the airline industry body IATA said on Thursday.
In its monthly traffic report, the International Air Transport Association said air passenger demand rose just 3% in April on a year-on-year basis, while freight demand growth was 3.7% up on the same month in 2007.
“The impact of skyrocketing oil prices and weaker economies has made its way to traffic growth,” IATA President Giovanni Bisignani said in a statement. “Combine slowing growth with skyrocketing oil prices, and the industry outlook is grim at best,” Bisignani said.
Cross-border air shipments, which IATA measures in freight tonne kilometres, are considered a prime indicator of the health of world trade.
In the first four months of 2008, demand for such cargo shipments was up 3.4% compared with the same period of 2007, a much slower growth rate than in past years. “There has been a step change downwards,” Bisignani said.
IATA represents 240 airlines operating 94% of all international passenger and cargo flights. Domestic flights are excluded from its data. Go here for the IATA report.
Get Ready To Pay More for Everyday Items, Especially Imported Ones: Report
(PRNewswire-FirstCall/ - CIBC)
Exploding transport costs are driving up prices and could force some manufacturing to move closer to home, says CIBC World Markets
The soaring price of oil has dramatically increased the cost of moving goods around the globe, posing a major threat to price stability and overseas manufacturing, finds a new report from CIBC World Markets.
“Exploding transport costs may soon remove the single most important brake on inflation over the last decade – wage arbitrage with China,” says Jeff Rubin, chief economist and chief strategist at CIBC World Markets. “Not that Chinese manufacturing wages won’t still warrant arbitrage. But in today’s world of triple-digit oil prices, distance costs money.”
The report finds that the cost of shipping a standard 40-ft. container from East Asia to the North American east coast has already tripled since 2000 and will double again as oil prices head towards US$200 per barrel. These soaring energy costs are threatening to offset decades of trade liberalization and force some overseas manufacturing to return closer to home.
“Unless that container is chock full of diamonds, its shipping costs have suddenly inflated the cost of whatever is inside,” adds Rubin. “And those inflated costs get passed onto the Consumer Price Index when you buy that good at your local retailer. As oil prices keep rising, pretty soon those transport costs start cancelling out the East Asian wage advantage.”
Rubin says that these forces may reverse the impact of globalization.
“Higher energy prices are impacting transport costs at an unprecedented rate. So much so, that the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today.”
The report notes that it currently costs US$8,000 to ship a standard 40-ft. container from Shanghai to the North American east coast, including in-land transportation. That’s up from just US$3,000 in 2000 when oil was US$20 per barrel. At US$200 per barrel of oil, the cost to ship the same container is likely to reach US $15,000.
The impacts of these rising costs are already being seen in capital intensive manufacturing that carry a high ratio of freight costs to the final sale price, such as steel production. Soaring transport costs, first on importing coal and iron to China and then exporting finished steel overseas, have more than eroded the wage advantage and suddenly rendered Chinese-made steel uncompetitive in the U.S. market. Underscoring this is the fact that China’s steel exports to the U.S. are falling by more than 20% year over year, while US domestic steel production has risen by almost 10%.
“That’s great news if you are the United Steelworkers of America,” Rubin says. “Long lost jobs will soon be coming home. And the more that oil and transport costs rise for Chinese steel exporters, the more that North American steel wage rates can grow. But if you’re a steel buyer, your costs are going up regardless of whether you’re sourcing from China or Pittsburgh.”
Converting transport costs into tariff equivalents shows how disruptive soaring energy prices can be. Rubin notes that oil at US$150 per barrel equates to an 11% tariff rate – a level last seen in the 1970s. At $200 per barrel of oil, “We are back at tariff rates even prior to the Kennedy Round GATT negotiations of the mid-1960s,” he says. “Even at US$100 per barrel of oil, transport costs outweigh the impact of tariffs for all of America’s trading partners, including Canada and Mexico.”
Rubin points to history to show how higher energy and transport costs serve to dampen trade and force markets to seek shorter, and cheaper supply lines. Global exports have soared in all periods over the last 50 years when trade barriers were reduced and oil prices were low, his analysis shows. But he says exports “went absolutely nowhere” during the oil and energy crises of the 1970s, and for several years after despite reductions in global tariffs and healthy recoveries from recessionary periods.
“It’s relatively easy to see why North American importers shifted to regional trading during that time,” Rubin says. “Trans-oceanic transport costs literally exploded during the two oil price shocks. The cost of shipping a standard cargo load overseas almost tripled, just as it (has) over the past few years. Ultimately, soaring transport costs were borne by consumers and markets responded accordingly, substituting goods that could be sourced from closer locations than half way around the world carrying hugely inflated freight costs.” Read the complete article.
Related: CIBC World Markets report (PDF format).
Exploding transport costs are driving up prices and could force some manufacturing to move closer to home, says CIBC World Markets
The soaring price of oil has dramatically increased the cost of moving goods around the globe, posing a major threat to price stability and overseas manufacturing, finds a new report from CIBC World Markets.
“Exploding transport costs may soon remove the single most important brake on inflation over the last decade – wage arbitrage with China,” says Jeff Rubin, chief economist and chief strategist at CIBC World Markets. “Not that Chinese manufacturing wages won’t still warrant arbitrage. But in today’s world of triple-digit oil prices, distance costs money.”
The report finds that the cost of shipping a standard 40-ft. container from East Asia to the North American east coast has already tripled since 2000 and will double again as oil prices head towards US$200 per barrel. These soaring energy costs are threatening to offset decades of trade liberalization and force some overseas manufacturing to return closer to home.
“Unless that container is chock full of diamonds, its shipping costs have suddenly inflated the cost of whatever is inside,” adds Rubin. “And those inflated costs get passed onto the Consumer Price Index when you buy that good at your local retailer. As oil prices keep rising, pretty soon those transport costs start cancelling out the East Asian wage advantage.”
Rubin says that these forces may reverse the impact of globalization.
“Higher energy prices are impacting transport costs at an unprecedented rate. So much so, that the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today.”
The report notes that it currently costs US$8,000 to ship a standard 40-ft. container from Shanghai to the North American east coast, including in-land transportation. That’s up from just US$3,000 in 2000 when oil was US$20 per barrel. At US$200 per barrel of oil, the cost to ship the same container is likely to reach US $15,000.
The impacts of these rising costs are already being seen in capital intensive manufacturing that carry a high ratio of freight costs to the final sale price, such as steel production. Soaring transport costs, first on importing coal and iron to China and then exporting finished steel overseas, have more than eroded the wage advantage and suddenly rendered Chinese-made steel uncompetitive in the U.S. market. Underscoring this is the fact that China’s steel exports to the U.S. are falling by more than 20% year over year, while US domestic steel production has risen by almost 10%.
“That’s great news if you are the United Steelworkers of America,” Rubin says. “Long lost jobs will soon be coming home. And the more that oil and transport costs rise for Chinese steel exporters, the more that North American steel wage rates can grow. But if you’re a steel buyer, your costs are going up regardless of whether you’re sourcing from China or Pittsburgh.”
Converting transport costs into tariff equivalents shows how disruptive soaring energy prices can be. Rubin notes that oil at US$150 per barrel equates to an 11% tariff rate – a level last seen in the 1970s. At $200 per barrel of oil, “We are back at tariff rates even prior to the Kennedy Round GATT negotiations of the mid-1960s,” he says. “Even at US$100 per barrel of oil, transport costs outweigh the impact of tariffs for all of America’s trading partners, including Canada and Mexico.”
Rubin points to history to show how higher energy and transport costs serve to dampen trade and force markets to seek shorter, and cheaper supply lines. Global exports have soared in all periods over the last 50 years when trade barriers were reduced and oil prices were low, his analysis shows. But he says exports “went absolutely nowhere” during the oil and energy crises of the 1970s, and for several years after despite reductions in global tariffs and healthy recoveries from recessionary periods.
“It’s relatively easy to see why North American importers shifted to regional trading during that time,” Rubin says. “Trans-oceanic transport costs literally exploded during the two oil price shocks. The cost of shipping a standard cargo load overseas almost tripled, just as it (has) over the past few years. Ultimately, soaring transport costs were borne by consumers and markets responded accordingly, substituting goods that could be sourced from closer locations than half way around the world carrying hugely inflated freight costs.” Read the complete article.
Related: CIBC World Markets report (PDF format).
Thursday, April 24, 2008
Small Businesses Prove to Be Resilient Despite Difficult Market Conditions
(Business Development Bank of Canada)
Drawing on data from its loan portfolio and its experience with its 27,000 entrepreneur clients, the Business Development Bank of Canada (BDC) has found that to date small business is generally managing to cope with the effects of a strong Canadian dollar and turbulence in the financial markets. This is one of the conclusions BDC reaches in the first issue of its new Entrepreneurial Insight newsletter.
"Small businesses and especially manufacturers make up much of BDC's loan portfolio. Thus the state of our portfolio could be a good barometer of the health of SMEs and the Canadian economy," says Jérôme Nycz, Vice President, Strategy & Planning. "Our loan portfolio is relatively stable and solid. The number of clients having temporary or permanent difficulties in repaying their loans remains low and has changed very little in the past three years. Although 2008 is far from over and we are continuing to monitor the situation closely, so far we have seen that entrepreneurs are very resilient and most can adjust to market conditions."
However, BDC has also found that market conditions are having more impact on manufacturers. Nearly half of the BDC loans that have deteriorated (i.e. are unlikely to be repaid) were granted to manufacturers. Manufacturing exporters, particularly those whose exports to the United States make up 40% or more of their sales, are the most vulnerable.
“SMEs that moved into export markets in recent years were betting on the proximity and ease of trading with the United States,” Mr. Nycz explained. “Because of their generally lower productivity, the rapid increase in the value of the Canadian dollar and fierce global competition, SME manufacturing exporters who relied too heavily on the U.S. market are suffering the consequences today.”
Although they account for only 4.2% of Canadian SMEs, manufacturers make up 26% of BDC’s clients. To help them adjust to market conditions, BDC recently offered its eligible clients the option of postponing principal payments on their loans for six months.
”We know that manufacturers who navigate through these difficult waters successfully are those that have developed clear business strategies so that they are ready to seize opportunities on national and international markets. By offering them this financial respite, we wanted to give our entrepreneur clients the leeway they need to review their business plans and export strategies and look at ways to improve productivity,” Mr. Nycz explained.
Drawing on data from its loan portfolio and its experience with its 27,000 entrepreneur clients, the Business Development Bank of Canada (BDC) has found that to date small business is generally managing to cope with the effects of a strong Canadian dollar and turbulence in the financial markets. This is one of the conclusions BDC reaches in the first issue of its new Entrepreneurial Insight newsletter.
"Small businesses and especially manufacturers make up much of BDC's loan portfolio. Thus the state of our portfolio could be a good barometer of the health of SMEs and the Canadian economy," says Jérôme Nycz, Vice President, Strategy & Planning. "Our loan portfolio is relatively stable and solid. The number of clients having temporary or permanent difficulties in repaying their loans remains low and has changed very little in the past three years. Although 2008 is far from over and we are continuing to monitor the situation closely, so far we have seen that entrepreneurs are very resilient and most can adjust to market conditions."
However, BDC has also found that market conditions are having more impact on manufacturers. Nearly half of the BDC loans that have deteriorated (i.e. are unlikely to be repaid) were granted to manufacturers. Manufacturing exporters, particularly those whose exports to the United States make up 40% or more of their sales, are the most vulnerable.
“SMEs that moved into export markets in recent years were betting on the proximity and ease of trading with the United States,” Mr. Nycz explained. “Because of their generally lower productivity, the rapid increase in the value of the Canadian dollar and fierce global competition, SME manufacturing exporters who relied too heavily on the U.S. market are suffering the consequences today.”
Although they account for only 4.2% of Canadian SMEs, manufacturers make up 26% of BDC’s clients. To help them adjust to market conditions, BDC recently offered its eligible clients the option of postponing principal payments on their loans for six months.
”We know that manufacturers who navigate through these difficult waters successfully are those that have developed clear business strategies so that they are ready to seize opportunities on national and international markets. By offering them this financial respite, we wanted to give our entrepreneur clients the leeway they need to review their business plans and export strategies and look at ways to improve productivity,” Mr. Nycz explained.
Friday, April 11, 2008
Emerson and Provincial and Territorial Representatives United on Canada’s Trade Priorities
(DFAIT)
The Honourable David Emerson, Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, recently met with provincial and territorial representatives to discuss Canada’s current trade agenda and the status of the World Trade Organization (WTO) negotiations.
“Canada is recognized as a world-class trading nation, but we need to keep up with global competition,” said Minister Emerson. “Today, we agreed to continue working together to build new commercial relationships, improve conditions for business and investors, and increase market access for Canadian goods, services and talent around the world.”
Minister Emerson outlined key elements of the Global Commerce Strategy, the federal government’s blueprint for strengthening Canada’s competitiveness in global markets. Canada has one of the most successful and prosperous economies in the world. The Strategy lays the foundations for a stronger, more competitive position in global markets by providing tools to help Canadian business tap into global value chains and adapt to today’s ever-changing international markets.
Canada benefits greatly from its strong commercial links with the United States and the many advantages that the North American Free Trade Agreement affords. Being part of the largest free trade zone in the world puts Canada on a unique footing with its competitors. The North American partnership remains central to the federal government’s strategy for ensuring a strong and prosperous Canadian economy.
At the meeting, ministers benefited from a valuable exchange with Michael Wilson, Canada’s Ambassador to Washington, on the subject of a strategic approach to addressing common objectives with the United States. They also had the opportunity to consider ways to maximize the advantages of the North American platform and deliver results for business and citizens.
Ministers discussed Canada’s relationship with the European Union and a study under way that examines the benefits of strengthening our economic ties. Launched by leaders at the June 2007 Canada-EU Summit, the study covers a wide range of bilateral trade and investment issues. Ministers expressed optimism that Canada and the EU can achieve a more extensive commercial partnership.
Minister Emerson provided an update on the current Doha Development Round of WTO negotiations and led a frank discussion about Canada’s position in the negotiations. Ministers reaffirmed their unanimous support for a successful outcome.
“Canada will continue to nurture its existing relationships and promote its ambitious trade agenda to increase prosperity for Canadians across the country,” added Minister Emerson. “I am pleased that my provincial and territorial counterparts expressed support for our bilateral and regional trade agenda, and for developing stronger commercial partnerships in the Americas, Asia and Europe.”
The Honourable David Emerson, Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, recently met with provincial and territorial representatives to discuss Canada’s current trade agenda and the status of the World Trade Organization (WTO) negotiations.
“Canada is recognized as a world-class trading nation, but we need to keep up with global competition,” said Minister Emerson. “Today, we agreed to continue working together to build new commercial relationships, improve conditions for business and investors, and increase market access for Canadian goods, services and talent around the world.”
Minister Emerson outlined key elements of the Global Commerce Strategy, the federal government’s blueprint for strengthening Canada’s competitiveness in global markets. Canada has one of the most successful and prosperous economies in the world. The Strategy lays the foundations for a stronger, more competitive position in global markets by providing tools to help Canadian business tap into global value chains and adapt to today’s ever-changing international markets.
Canada benefits greatly from its strong commercial links with the United States and the many advantages that the North American Free Trade Agreement affords. Being part of the largest free trade zone in the world puts Canada on a unique footing with its competitors. The North American partnership remains central to the federal government’s strategy for ensuring a strong and prosperous Canadian economy.
At the meeting, ministers benefited from a valuable exchange with Michael Wilson, Canada’s Ambassador to Washington, on the subject of a strategic approach to addressing common objectives with the United States. They also had the opportunity to consider ways to maximize the advantages of the North American platform and deliver results for business and citizens.
Ministers discussed Canada’s relationship with the European Union and a study under way that examines the benefits of strengthening our economic ties. Launched by leaders at the June 2007 Canada-EU Summit, the study covers a wide range of bilateral trade and investment issues. Ministers expressed optimism that Canada and the EU can achieve a more extensive commercial partnership.
Minister Emerson provided an update on the current Doha Development Round of WTO negotiations and led a frank discussion about Canada’s position in the negotiations. Ministers reaffirmed their unanimous support for a successful outcome.
“Canada will continue to nurture its existing relationships and promote its ambitious trade agenda to increase prosperity for Canadians across the country,” added Minister Emerson. “I am pleased that my provincial and territorial counterparts expressed support for our bilateral and regional trade agenda, and for developing stronger commercial partnerships in the Americas, Asia and Europe.”
Monday, December 17, 2007
Labour Shortages Are Global
(Stephen Poloz, Export Development Canada)
We hear about labour shortages a lot – there are not enough doctors, carpenters, plumbers, or skilled workers in general (except, perhaps, economists). This is becoming a global problem.
Economists will tell you that labour shortages are not supposed to happen. When something is in short supply, excess demand pushes the price up. This reduces demand and increases supply. When it comes to skilled labour, the supply response is by necessity gradual, and may be very difficult, since it requires education and, perhaps re-education of transitioning workers.
Perhaps the bigger problem is that global population growth is on the decline. Population growth averaged 2% per year in the 1960s and 1970s and has been easing ever since. Growth was 1.2% for the past five years, and this is projected to fall to as little as 0.4% by the 2040s. Some countries are already experiencing population declines, such as Japan, for example.
This slowdown in labour supply has contributed to declines in unemployment rates to near historical lows in many countries. This has made the workers available in emerging markets look even more attractive. In a country where population growth is very low, then, the choice is clear: either allow more immigration to fuel domestic growth, or grow the economy offshore.
An interesting case study is the Czech Republic, where the population has been in decline since the mid-1990s. The share of the population that is over 65 is now 20%, and it is expected to rise to over 30% by 2020. This is much worse than the world situation, where old-age dependency is presently around 10%, and will only rise to about 14% by 2020.
As a consequence, Czech companies no longer talk about the shortage of skilled people, they talk instead about the shortage of people, period. They are willing to do all necessary training themselves. They have gone on recruiting missions to such places as Vietnam or Belarus but are finding that channel of growth to be very costly and difficult to plan.
The solution? Grow the company without labour force growth. That means increasing automation in domestic plants, relying on only the most skilled workers, and expanding the business in other countries. A global production structure, facilitated by international trade, is the quickest route to higher productivity growth, as experience in the U.S. illustrates. That’s why global cross-border investment has been growing by some 30% per year in the last 3-4 years, and why a country like the Czech Republic can see inbound investment growing by 42% per year. Outbound investment is growing even more rapidly, albeit from a lower starting point. And policymakers are catching on: CzechInvest, the government agency traditionally tasked with attracting investment to the Czech Republic, is now in the business of helping Czech companies invest abroad as well.
The bottom line? Population trends are yet one more force fuelling globalization. Even countries with a positive mix of population growth and immigration are likely to see steady upgrading of domestic skills and the increasing use of offshore structures to cope with labour shortages.
We hear about labour shortages a lot – there are not enough doctors, carpenters, plumbers, or skilled workers in general (except, perhaps, economists). This is becoming a global problem.
Economists will tell you that labour shortages are not supposed to happen. When something is in short supply, excess demand pushes the price up. This reduces demand and increases supply. When it comes to skilled labour, the supply response is by necessity gradual, and may be very difficult, since it requires education and, perhaps re-education of transitioning workers.
Perhaps the bigger problem is that global population growth is on the decline. Population growth averaged 2% per year in the 1960s and 1970s and has been easing ever since. Growth was 1.2% for the past five years, and this is projected to fall to as little as 0.4% by the 2040s. Some countries are already experiencing population declines, such as Japan, for example.
This slowdown in labour supply has contributed to declines in unemployment rates to near historical lows in many countries. This has made the workers available in emerging markets look even more attractive. In a country where population growth is very low, then, the choice is clear: either allow more immigration to fuel domestic growth, or grow the economy offshore.
An interesting case study is the Czech Republic, where the population has been in decline since the mid-1990s. The share of the population that is over 65 is now 20%, and it is expected to rise to over 30% by 2020. This is much worse than the world situation, where old-age dependency is presently around 10%, and will only rise to about 14% by 2020.
As a consequence, Czech companies no longer talk about the shortage of skilled people, they talk instead about the shortage of people, period. They are willing to do all necessary training themselves. They have gone on recruiting missions to such places as Vietnam or Belarus but are finding that channel of growth to be very costly and difficult to plan.
The solution? Grow the company without labour force growth. That means increasing automation in domestic plants, relying on only the most skilled workers, and expanding the business in other countries. A global production structure, facilitated by international trade, is the quickest route to higher productivity growth, as experience in the U.S. illustrates. That’s why global cross-border investment has been growing by some 30% per year in the last 3-4 years, and why a country like the Czech Republic can see inbound investment growing by 42% per year. Outbound investment is growing even more rapidly, albeit from a lower starting point. And policymakers are catching on: CzechInvest, the government agency traditionally tasked with attracting investment to the Czech Republic, is now in the business of helping Czech companies invest abroad as well.
The bottom line? Population trends are yet one more force fuelling globalization. Even countries with a positive mix of population growth and immigration are likely to see steady upgrading of domestic skills and the increasing use of offshore structures to cope with labour shortages.
Friday, December 14, 2007
Back to the 70s: That Was Then, This Is Now
(Stephen Poloz, Export Development Canada)
Those of us with grey hair have noticed that there are a lot of parallels between our current economic situation and that of the 1970s. But there are differences, too, and these are important enough to suggest that things will be different this time.
The similarities with the 1970s are obvious. High prices for oil, gold, base metals, food and fertilizer. A weak U.S. dollar. War, then in Viet Nam, now in Iraq and Afghanistan. Concerns about inflation, combined with worries about recession - the stagflation recipe. Not to mention a fast-growing economy changing the global landscape - then it was Japan, now it is China.
And some of the differences? Start with oil. In the early 1970s, the world used 1.3 barrels of oil per $1,000 of GDP, whereas today it uses 0.8, 40% less. The U.S. has more than halved its oil intensity, from 1.5 barrels to 0.7. And China, forecast by many to exhaust the world’s supply of oil, has seen intensity fall from 4 barrels to 1.3. China is very likely to reduce its oil intensity at least to global levels during the next 10 years, and may go further, as Japan has done. Accordingly, it is folly to extrapolate China’s demand growth as if nothing else is going on, just as it was wrong to extrapolate Japan’s oil demand in 1980.
Same thing for copper. Copper sold for U.S. $6800 per tonne in 1974, and the book “The Limits to Growth” published by the Club of Rome predicted that the world would run out of copper by 1999. Instead, the price had fallen to under $2,000 by 1999, as new supplies and substitutes emerged. Prices are back at 1970s levels again today, and another decline in prices is in store.
The world economy has changed in other important ways, too. Populations of the major economies are a lot older, so they react differently to shocks today, behaving more as investors than as consumers. Economies are more integrated internationally, as trade now represents 60% of global GDP, as opposed to 30-35% in the early 1970s. Economic and financial synchronization is the new paradigm, not decoupling. Even economic theory has changed. Economists’ understanding of inflation and central banking have been advanced dramatically, due in no small part to the experience of the 1970s. Indeed, the 1970s were arguably just as important to economic thinking as the 1930s.
And then there are the usual concerns about war, fiscal deficits and the consequent forecast demise of the U.S. dollar. U.S. defense spending was running at 8% of GDP in the early 1970s, and it was to fall to a low of 3% in 2000. It has risen since then, but only to 4%. But one parallel that is likely to hold up is that today’s calls for the U.S. dollar’s demise are just as premature as those of the 1970s proved to be. The dollar cycles inversely to global business and commodity cycles, and always will.
The bottom line? It’s true, there are a lot of similarities with the 1970s. But that was then, this is now. The 1970s ended in tears, and there is much less reason for this decade to do likewise.
Those of us with grey hair have noticed that there are a lot of parallels between our current economic situation and that of the 1970s. But there are differences, too, and these are important enough to suggest that things will be different this time.
The similarities with the 1970s are obvious. High prices for oil, gold, base metals, food and fertilizer. A weak U.S. dollar. War, then in Viet Nam, now in Iraq and Afghanistan. Concerns about inflation, combined with worries about recession - the stagflation recipe. Not to mention a fast-growing economy changing the global landscape - then it was Japan, now it is China.
And some of the differences? Start with oil. In the early 1970s, the world used 1.3 barrels of oil per $1,000 of GDP, whereas today it uses 0.8, 40% less. The U.S. has more than halved its oil intensity, from 1.5 barrels to 0.7. And China, forecast by many to exhaust the world’s supply of oil, has seen intensity fall from 4 barrels to 1.3. China is very likely to reduce its oil intensity at least to global levels during the next 10 years, and may go further, as Japan has done. Accordingly, it is folly to extrapolate China’s demand growth as if nothing else is going on, just as it was wrong to extrapolate Japan’s oil demand in 1980.
Same thing for copper. Copper sold for U.S. $6800 per tonne in 1974, and the book “The Limits to Growth” published by the Club of Rome predicted that the world would run out of copper by 1999. Instead, the price had fallen to under $2,000 by 1999, as new supplies and substitutes emerged. Prices are back at 1970s levels again today, and another decline in prices is in store.
The world economy has changed in other important ways, too. Populations of the major economies are a lot older, so they react differently to shocks today, behaving more as investors than as consumers. Economies are more integrated internationally, as trade now represents 60% of global GDP, as opposed to 30-35% in the early 1970s. Economic and financial synchronization is the new paradigm, not decoupling. Even economic theory has changed. Economists’ understanding of inflation and central banking have been advanced dramatically, due in no small part to the experience of the 1970s. Indeed, the 1970s were arguably just as important to economic thinking as the 1930s.
And then there are the usual concerns about war, fiscal deficits and the consequent forecast demise of the U.S. dollar. U.S. defense spending was running at 8% of GDP in the early 1970s, and it was to fall to a low of 3% in 2000. It has risen since then, but only to 4%. But one parallel that is likely to hold up is that today’s calls for the U.S. dollar’s demise are just as premature as those of the 1970s proved to be. The dollar cycles inversely to global business and commodity cycles, and always will.
The bottom line? It’s true, there are a lot of similarities with the 1970s. But that was then, this is now. The 1970s ended in tears, and there is much less reason for this decade to do likewise.
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