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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. Annual export sales exceed $200 million, mainly to the USSR, South Asia, China, Middle East and Africa, and account or 36 per cent of total sales of this important Canadian industry. Canadian consulting engineering firms are also successfully pursuing projects in the oil and gas sector.

Power Sector

Canada has had a long-standing and rewarding collaboration with WAPDA in the power sector. Pakistan's first hydroelectric power plant in Warsak, its first thermal power generation station at Sukkur, its first nuclear power station at Karachi and its 500 kv power transmission line were all built with Canada's help. Canada has also helped bring the giant Tarbela project to its present stage of development. It can be expected as WAPDA and the private sector bring new power generation and transmission projects on stream that Canadian consulting engineering firms and equipment manufacturers will continue to participate in the realization of these high-priority projects.


Canada's agricultural and food processing industries will play an increasingly important role in the bilateral commercial relationship. One of the world's leading food producers, Canada is best known for its excellent grain, oil seeds, vegetables, meats and dairy products. Canadian farming practices, fertilizer and feed technologies and equipment and management technologies all contribute to Canada's internationally recognized successes in this sector.

This year, Pakistan purchased wheat from the Canadian Wheat Board for the first time. Canadian wheat has an international reputation for high quality, cleanliness, uniformity and reliability of supply. This excellent reputation was earned through the Canadian Grain Commission's leadership in the development of a system for strict control of varieties allowed for commercial production, a rigid visual grading system, a unique bulk grain handling system and an extensive quality control and research programme.

In Pakistan, low-cost, balance fertilization is essential to increased agricultural production. Potassium, or potash as it is more commonly known commercially is one of the key ingredients in a balanced fertilization programme. Canada is the world's second largest producer of potash and is the leading exporter of this commodity, with a 40 per cent share of the international market. Most of the Canadian production comes from the province of Saskatchewan, where more than 50 per cent of the world's known reserves of potash are located. Asian countries, mainly Japan, China, Indonesia, Malaysia, South Korea and India are the principal markets for Canadian potash.

Canpotex, which is the export sales arm of Saskatchewan potash producers, and the Phosphate and Potash Institute of Canada, under CIDA auspices, are currently planning a pilot programme with the Pakistan Ministry of Food and Agriculture to demonstrate the benefits of environmentally sound, balanced fertilization. Dramatic improvements in crop yield, quality and economic return can be expected when potash is applied in the appropriate amounts.

Edible Oils

In Pakistan the value of high-quality, low-fat edible oil is increasingly recognized. These oils are gaining in popularity. Canada is a leading exporter of edible oils and seeds, especially canola, and is well placed to support a strong edible oil industry in Pakistan. Canola, which is the edible oil with the lowest proportion of saturated fats of all common edible oils was developed in Canada from rapeseed. Today, canola accounts for more than 60 per cent of all vegetable oils produced in Canada; well over 65 per cent of canola seeds and oil are exported. Canola is well known in Pakistan, especially in the barani areas. The production of canola seed and oil in Pakistan and the development of a canola-based industry in Pakistan can be built upon existing knowledge of this crop and its industry's development (which has been assisted by a ten-year, $10 million CIDA program). The Pakistani private sector ghee and edible oil industry is also showing considerable interest in canola.

Pulp & Paper Products

Pakistan has regularly purchased modest quantities of Canadian pulp and paper products. The growing demand for these products in Pakistan, as well as the increased emphasis on the indigenous production of paper, will increase the opportunities for the sale of Canadian pulp and paper products and for industrial cooperation and transfer of technology projects between the two countries.

In Canada, the forest products sector is one of the leading industries in terms of gross domestic product, value of manufacturing shipments and export earnings. Canadian forest products export sales are in the range of $23 billion and represent 20 per cent of the world market in these products. The Canadian share of world forest product exports is double that of the U.S., Sweden or Finland.
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Publication:Economic Review
Date:Feb 1, 1993
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