Study: Canada's merchandise trade with the European Union

1995 to 2004 

Canada's two-way merchandise trade with the European Union (EU) represented less than one-tenth of our total trade with the world in 2004, despite considerable gains in both exports and imports over the previous 10 years, according to a new report.

The EU accounted for 8% of our total trade in 2004, unchanged from a decade earlier.

But during this period, imports from the EU increased at twice the pace of our exports. As a result, Canada's trade deficit with the EU tripled from nearly $6.0 billion in 1995 to $19.4 billion in 2004. This was down slightly from the peak of $21.5 billion in 2002.

Exports rose at an annual average pace of 3.5%, while imports surged at an annual average rate of 7.1%. The annual rate of growth in imports from the EU was second only to the explosive growth in Canada's imports from the People's Republic of China.

Canada's primary imported merchandise from the EU has been machinery (dominated by aircraft engines), the value of which hit a record $7.5 billion in 2004. The EU's share of Canada's total imports of machinery has increased from 11% in 1995 to 13% in 2004.

However, Canadian imports of pharmaceutical products from the EU surged during the decade, increasing almost seven-fold to $4.2 billion in 2004. The EU now accounts for virtually half of Canada's total imports of pharmaceutical products.

In terms of exports, the picture would have been significantly worse during the decade had it not been for Canada's diamond exports from the North.

Canadian exports of precious stones and metals increased from just under $200 million in 1995 to a staggering $3.3 billion by 2004. Diamonds accounted for half of this total.

Provincially, Nova Scotia's exports to the EU accounted for 11% of their total exports in 2004, the largest share among the provinces.

In terms of dollar value, however, Quebec and Ontario were the biggest sources of exports to the EU. The EU accounted for more than one-half of total international exports for both provinces each year from 1995 to 2004.

Exports from Ontario to the EU increased at an annual rate of 6% during the decade, the fastest growth among the provinces. However, nationally, it was not the largest growth. Exports from the Northwest Territories, on the strength of the burgeoning diamond trade, surged at an annual rate of 26%.

The article "Canada's merchandise trade with the European Union: 1995 to 2004" (65-507-MIE2006006, free) is now available free online in the publication Canadian Trade Review (65-507-MIE, free). From the Our Products and Services page, under Browse our Internet publications choose Free, and then Trade.

Definitions, data sources and methods: survey number 2201.

Canadian Trade Review, published on an occasional basis, presents analysis and research on many trade-related issues of interest to general audiences, as well as economists and policy-makers in the public and private sectors.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Craig Byrd (613-951-3156: craig.byrd.statcan.ca), International Trade Division.