Is Canada the US's Primary Trade Partner

 I am pleased to submit the Canada's State of Trade 2020 report on behalf of the Government of Canada. This study provides Canadians with a view of our economic activity in 2019, while acknowledging the exceptional global uncertainties of 2020 due to the COVID-19 pandemic. Over the last three months, governments throughout the world have banded together to combat the worldwide epidemic, trying to safeguard the health and safety of our citizens while limiting the virus's economic impact. During this terrible period, we've seen entrepreneurs, workers, and all Canadians band together to help one another. Our firms have demonstrated great adaptability and inventiveness in finding new solutions to the issues they face.

This study focuses on how Canadian innovation and resilience have helped our companies compete in the global economy, as well as our government's commitment to enabling trade during turbulent times. As COVID-19 spread over the world, many countries shut down trade in order to safeguard their citizens. However, COVID-19 should not and cannot be used as a justification to halt trading or turn inward. Trade remains vital to Canadian prosperity, accounting for about two-thirds of the national economy and supporting 3.3 million Canadian jobs prior to COVID-19. We are recognized globally as a strong, stable, and dependable trading nation, as well as one of the best places in the world to invest and start a business.The COVID-19 pandemic has dominated economic events in 2020.

The resulting decline ends the economic boom that began in mid-2009, following the 2007-2008 global financial crisis

However, even before the pandemic struck countries around the world, 2019 was shaping up to be a challenging year for the global economy, with rising global tensions, trade policy uncertainty between the United States and China, and the Brexit process. These issues were exacerbated by contradicting economic figures. As a result, the global economy's growth forecast for 2019 was revised lower, reaching its lowest pace (2.9%) since the recession that followed the 2007-2008 global financial crisis, while global trade and investment performance in 2019 either stagnated or dropped marginally.

Despite uncertain global economic conditions, Canada's performance in 2019 was notable for growth. Canada's exports of goods and services totaled $729 billion in 2019, up 2.2% from 2018. Goods exports rose 1.7%, while service exports increased by 4.4%. Canada's top three goods exports—energy products, motor vehicles and components, and consumer goods—accounted for more than 45% of total exports and all increased faster than the 1.7% growth rate. Foreign direct investment in Canada and Canadian direct investment overseas both enjoyed significant growth, with two notable transactions adding to the rise. Canada maintains strong trade links with the United States, the European Union, and China, its top three trading partners. Goods exports to the United States and the European Union increased significantly, aided by free trade agreements with these countries.

In particular, the Comprehensive Economic and Trade Agreement, now in its second year of provisional application, continues to benefit Canadian exports to the European Union. However, there are indications that Canadian exporters and importers are not fully utilizing the agreement, implying that additional work may be required to promote the pact. In contrast, Canadian exports to China, Canada's third largest trading partner, followed a quite different trajectory in 2019. Instead of rising, Canadian commodities exports to China fell sharply by 16%. China's trade restrictions on Canadian food items contributed to this decline. This setback, however, was far from typical of China's commercial relationship with Canada during the 2010s. Between 2010 and 2019, Canada's goods exports to China grew at an average annual rate of 6.3%, while imports from China increased by 6.6%.

Despite the unfavorable global context, Canadian trade and investment outcomes in 2019 were generally positive when compared to global results

Canada's trade results in 2019 were generally lower below the decade-long norm. The impact of COVID-19, a worldwide crisis that no country evaded in 2020 and is predicted to have enormous economic and trade consequences, would most certainly overshadow the 2019 results in the long run. The containment measures put in place to limit the virus's spread had an impact on all aspects of international trade. This year's State of commerce report examines the early effects of COVID-19 on Canadian commerce. Beginning in Asia in January 2020, the virus soon expanded to a few European countries in February before affecting every part of the planet, including Canada, in March.

Early studies indicate that the effects on Canadian trade were not evenly spread. Early consequences can be seen in Canada's goods exports to China and South Korea, which fell 13% and 26%, respectively, in the first quarter of the year compared to the first quarter of 2019. While the declines cannot be entirely attributable to COVID-19, by March 2020, overall Canadian goods exports had fallen by 7.9% and imports by 8.4% compared to March 2019. However, the losses were unequal; exports and imports of some items and trading partners were severely hurt, while others were unaffected or even improved.Canada's primary products exports, energy exports, were affected by COVID-19 and a steep drop in oil prices, resulting in a 21% fall in March 2020 compared to the same month in 2019. Exports and imports of automotive products (23% and 18%, respectively), machinery (11% and 10%, respectively), and electronics (26% and 13%, respectively) were among the industries hardest hit by the crisis.

In contrast, Canada's agricultural exports increased in March 2020 compared to the previous year

Agriculture exports increased by 13%, driven by increasing shipments of oil seeds (60%) and vegetables (49%). Global supply chains, however, are under more pressure than ever before. That is why, under our Export Diversification Strategy, our government has recommitted to discovering new methods to assist and support Canadian business owners and entrepreneurs as they compete in the global market.The global economy's resurgence is dependent on inclusive and long-term trade collaboration. This entails ensuring that traditionally underrepresented groups, such as women entrepreneurs, small company owners, and Indigenous-led enterprises, may reap the benefits of trade. Diversity of thinking and expertise fosters more innovation, resulting in more robust organizations that can weather rough economic times. That is why our administration will continue to generate opportunities for Canadians and businesses from coast to coast.

Free trade agreements, including the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Canada-United States-Mexico Agreement (CUSMA), also known as the new NAFTA, broaden and diversify market opportunities. This provides our Canadian businesses with access to 1.5 billion clients worldwide, while also creating more opportunities and jobs for Canadians. Our strategy for improving Canada's economic partnerships includes conversations with Mercosur, the Pacific Alliance, and, potentially, the Association of Southeast Asian Nations. As we strive toward economic recovery, we will continue to collaborate with our foreign partners and take a leadership position in keeping supply chains open, strengthening and diversifying trade connections, and promoting rules-based trade for the twenty-first century. We need to enhance multilateral institutions like the World commerce Organization, which are critical to promoting rules-based commerce and providing our businesses with the stability they require to grow globally.