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The Globe and Mail

As Mexico booms, Canadian exporters benefit

Container ships are loaded and unloaded at the TSI Terminal Systems Inc. at Deltaport near Vancouver in this 2010 photo.

Lyle Stafford/lyle stafford The Globe and Mail

The most alarming statistic in Bank of Canada Governor Mark Carney's trade speech last week was this one: among Group of 20 countries, only Britain has lost a greater share of international trade since 2000 than Canada.

Some trading nation, eh?

Canada's share of imports by the world's major economies shrunk over the past couple of decades, with one exception: Mexico, the unsung hero of the global economy.

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A few weeks ago, Export Development Canada chief economist Peter Hall did me the favour of crunching some numbers. (See the accompanying chart.) Using the International Monetary Fund's "Direction of Trade" data, Mr. Hall showed that Canadian exporters might finally be doing some serious business with Canada's other partner in the North American free-trade agreement.

Canada's share of Mexican imports was 2.9 per cent in 2010, down slightly from 3.1 per cent in 2008 and 2009. But that's markedly better than 1993, when Canadian exports represented 1.8 per cent of Mexico's purchases from abroad.

This is exceptional. Canada's share of imports by Brazil, India, Russia, South Africa, Europe and the U.S. shrunk over the same period. Mr. Hall isn't as distraught over this trend as Mr. Carney. With the rise of China and other emerging markets, competition is fierce. It stands to reason that established powers such as Canada and European nations will lose some ground. But this makes Canada's gains in Mexico that much more noteworthy. "An impressive fact for NAFTA-bashers to consider," Mr. Hall wrote in a commentary last month.

The NAFTA countries release their latest trade data over the next couple of days: Mexico on Wednesday and Canada and the U.S. on Thursday. The reports will be read first for clues on the strength of the global economy. But the data could also add to evidence that Mexico is stepping out of the shadow cast by its bigger northern neighbours.

Brazil is everyone's darling these days, but Mexico's economy is growing faster at the moment. Mexican GDP advanced at an annual rate of 3.7 per cent in the fourth quarter and at an annual rate of 4.5 per cent in the third quarter of 2011. That left mighty Brazil eating Mexico's dust. Brazil's GDP grew at annual rates of 1.2 per cent and 2 per cent in the fourth and third quarters respectively. For all of 2011, Mexico's economy expanded 3.9 per cent compared with 2.5 per cent in Brazil, according to Bank of Nova Scotia.

The Canada-Mexico story isn't another tale of commodities. At least not entirely. Oil seeds and other agricultural products rank as the biggest exports to Mexico from Canada. But electronic equipment and machinery ranks a close second, and grew at an annual rate of 26 per cent over the past decade. Canadian companies are big investors in Mexico's mining industry.

Canadian merchandise exports to Mexico were worth about $5.5-billion in 2011, No. 5 behind the U.S., Britain, China and Japan. That's not a big number, considering exports to Japan were worth $10.6-billion. But that only means there is lots of room to grow.

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About the Author
Senior fellow at the Centre for International Governance Innovation

Kevin Carmichael is a senior fellow at the Centre for International Governance Innovation, based in Mumbai.Previously, he was Report on Business's correspondent in Washington. He has covered finance and economics for a decade, mostly as a reporter with Bloomberg News in Ottawa and Washington. A native of New Brunswick's Upper St. More

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