Canadian companies can stop blaming the strong loonie for the challenges they face exporting their goods and services, according to the Conference Board of Canada.
The strengthening of the Canadian dollar against the U.S. dollar is just one factor among several others behind the so-called “lost decade” of essentially no growth in Canadian exports, says the Conference Board report prepared for the Global Commerce Centre and made public Tuesday.
The trend over the past decade has been one of flat exports to the United States while exports to emerging markets grew by 80 per cent, says the analysis by Michael Burt, director of industrial economic trends at the Conference Board.
It’s important not to overstate the role the strong Canadian currency versus the U.S. dollar has played in hobbling export activity, says the report.
The loonie has also risen in value against a variety of other currencies, including the euro, the British pound, the Chinese yuan and the Mexican peso.
“Yet, in each case, the amount of bilateral trade between each of these jurisdictions and Canada has risen,” says the briefing.
In addition, the U.S. lost market share in Canadian imports despite the fact that the U.S. dollar has fallen by 37 per cent versus the Canadian dollar over the past decade.
“Many of the changes that happened in the past decade to our export-dependent industries would have occurred regardless of the value of the currency, although the dollar’s strength likely accelerated the pace,” Mr. Burt said in a news release.
“Focusing on the value of the dollar as a key cause of Canada’s changing trade patterns, and thus a tool to change them, is counter-productive. Canadian policy makers have very limited influence on the value of the currency. Thus, ‘managing’ the value of the Canadian dollar would be difficult and unlikely to produce the desired revival in some industries.”
China, in particular, has become a huge force in international trade and North American trading patterns have realigned as a result, says the study.
Canada has lost export market share to emerging markets in a wide array of products, including erstwhile stalwarts like wood and paper products.
“The loss of market share has certainly been accelerated by the rise in the value of the Canadian dollar, but it is very likely that it would have occurred even if the value of the dollar had remained constant,” the report says.