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Canada's Merchandise Trade with the European Union: 1995 to 2004
By Craig Byrd, International Trade Division, Statistics Canada
While two way trade between Canada and the EU accounted for 8% of Canada 's total trade in 2004, the same as a decade earlier, Canada has seen its trade balance with the EU move ever further into a deficit position. Canadian imports from the EU have increased at twice the annual rate of our exports to the EU since 1995.
Imports of machinery and mechanical appliances have had the biggest impact on the trade deficit with the EU. However, the trade deficit in pharmaceutical products has emerged as a major down force on Canada's balance of trade with the EU as imports of pharmaceuticals from the EU accounted for half of Canada's total imports of pharmaceuticals in 2004.
Only the recent discovery of diamonds in Canada's North has stemmed the ever increasing deficit with the EU. Exports of this commodity have skyrocketed since 1998. Conversely, wood pulp, the primary Canadian export to the EU in 1995, has seen its export values decline steadily since 2000, leaving the value of exports to the EU at less than half of what they were in 1995.
Ontario and Quebec contribute the greatest amount to the trade deficit, while British Columbia, Saskatchewan and the Northwest Territories record the only positive trade balances by 2004. Nova Scotia relies the most on exports to the EU, with 11% of their total exports shipped to the EU in 2004.
Recently, Canada's trade balance with the EU has been impacted by three significant developments: exports of pulp and paper, a traditionally big export to the EU, have slipped considerably; exports of diamonds from the North have increased sharply; and, pharmaceutical imports from the EU have increased dramatically.
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