Canadian Shipper


Let’s make new friends

Sitting in on the latest ‘All Eyes on the Economy’ session at the American Trucking Associations’ Management

Conference and Exhibition in Orlando, Icouldn’t help but fe el a sort of relief that as a country we continue to reduce our reliance on the United States.

 ACT Research president Kenneth Vieth summed up the US economic forecast best when he told the popular session: “We came through the Great Recession and we are now in the Great Okay.”

 Vieth was referring to expectations for continued but less than spectacular growth

in 2014 and 2015 for the US. Co-panelist Mark Vitner, managing director and senior economist at Wells Fargo, forecast GDP growth of 2.4% in 2014 and 2.7% for 2015.

 Such plain vanilla forecasting for our largest trading partner can’t be good for Canadian exporters and certainly isn’t

good for the Canadian carriers reliant on moving that trade stateside. But, despite a choppy economy this side of the border as well, there may be reason for more optimism as our reliance on the US market continues to be progressively reduced. Though the United States will – and should – remain Canada’s largest trading partner, the percentage of Canadian trade with the US has dropped to 74% from nearly 90% in the past decade and is expected to decline another 10% by the end of this decade. 

Diversifying our export markets makes a great deal of sense. The multi-billion dollar pact just agreed to by the European Union and Canada, integrating two of the world’s largest economies, is a good example.

 The deal makes Canada the only G8 country– and one of the only developed nations anywhere – to have preferential access to the world’s two largest markets, the EU and the United States, home to a total of 800 million people. The deal is expected to increase bilateral trade in goods and services by a fifth to 25.7 billion euros ($35 billion) a year, according to the latest EU estimates. According to a federal report, CETA could boost the Canadian economy by at least C$12 billion annually.

The EU is Canada’s second-biggest trading partner, with goods and services exports totaling C$40 billion and imports totaling C$52 billion in 2011.

 The Comprehensive Economic and Trade Agreement, CETA, goes far beyond the North American Free Trade Agreement and, much to the delight of supply chain professionals struggling with the red tape currently involved in EU trade, will eliminate thousands of tariffs. Once legal, 98% of EU and Canadian tariffs will be eliminated immediately.

That includes 95% of EU tariffs on agriculture products such as grains, canola and fruit. Other tariffs and restrictions will be

phased out over seven years.

The agreement could come into effect from 2015, after EU governments, the European Parliament and the Canadian provinces give their blessing. 

As we reported in a previous issue, traditionally strong North Atlantic, general cargo trading partners such as Montreal and Halifax are well positioned to reap the benefits of increased trade with Europe, but so could other ports on the Great Lakes/St. Lawrence maritime corridor benefit from increased shipments across the Atlantic. Falling under the latter category would be such mainstream commodity ports as Quebec, Sept Iles, Port Cartier,
and Hamilton.

 Bob Armstrong, president of the Chartered Institute of Logistics & Transport North America and of ATLAS Trade & Logistics Advisory Services Inc states “there is no doubt “ in his mind that imports and exports between Canada and the EU will grow, as has been experienced under the North American Free Trade Agreement for more than two decades.

 “The marine industry,” he says, “should be excited about the growth prospects of two-way trade as tariffs are reduced to zero and other barriers to trade are eliminated in the final drafting of this free trade agreement.

Commodities from Canada such as iron ore and coal will have new markets in the EU and be a boon to marine operators.”

 Rail, airfreight, intermodal and trucking service providers also stand to benefit from increased trade.

 Given its proximity, the size of its market, and the wealth of its consumers, the United States will always be our most important trading partner. But it can’t hurt to have a few more close friends out there.  

Lou Smyrlis, MCILT

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