Italian Chamber of Commerce in Canada West | The positioning in the Canadian market: import / export Italy – Canada with a focus on the most interesting commodities sectors
Italian Chamber of Commerce in Canada West
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09 Oct The positioning in the Canadian market: import / export Italy – Canada with a focus on the most interesting commodities sectors

The analysis of the Centro Studi Italia Canada about the numbers related to the Canada-Italy interchange shows how the economic agreement CETA is not affecting the type and quality of the traded goods but on the quantities, with enormous advantages for Italian productions.

 

Paolo Quattrocchi*

Francesca Paolucci*

Dalia Casula*

 

The Centro Studi Italia Canada has already had the opportunity to analyze the numbers and trends in trade between Canada and the European Union, relating to the first 5 months of the provisional execution of the economic and commercial agreement between Canada and the European Union (Oct 2017- Feb 2018) and subsequently, the data updated to July 2018, 10 months after the entry into force of CETA, comparing them with the same period of the previous year.

 

Related articles:

 

One year of CETA: the advantages for Italy and the dispelled misgivings

 

A few more observations on CETA

 

The advantages of CETA for Italy that no one talks about

 

The data collected showed that both imports and exports (on both sides of the Atlantic) grow compared to previous years and that the trade balance remains positive for Italy, despite the significant growth of Canadian exports, demonstrating on the other hand, the absence of the announced invasion from Canada of toxic products for the health of the consumers.

 

This further study comes from the need to analyze the positioning of the Canadian market compared to the players, both globally and in Europe, with a focus on the commodities sectors subject to the exchange between Canada and Italy, representing the quality and quantity of goods that lead our export to Canada.

The following report also provides:

 

the import and export values for the first semester of 3 different years (2014, 2016, 2018), (Tables 1 and 2);

the growth rates achieved in relation to biennium 2014/2016 and 2016/2018 (Graphs 1,2,3,4);

the market shares held by the main goods traded between Canada and Italy (Tables 3 and 4; graphs 5 and 6).

 

Values are expressed, where not specified, in $ mld CAD. The data comes from official sources such as ISTAT and Statistics Canada.

 

1. GLOBAL TRADE IN GOODS CANADA

 

The total value of Canadian imports at global level stands at $ 302,098 in the first half of 2018 and the main suppliers are: United States ($ 194,707), European Union ($ 31,338), China ($ 22,758), Mexico ($ 10,605), Japan ($6,858). These countries cover 88% of the total value of Canadian imports.

The total value of Canadian exports stands at $ 288,178 in the first half of 2018, and the main recipients are: United States ($ 213,602), European Union ($ 22,541), China ($ 12,978), Japan ($ 6,549), Mexico ($ 4,783). These countries cover 90.4% of the total value of Canadian exports.

For this it should be noted that Canada’s main partners are all, or almost, partners in trade agreements with Canada. United States and Mexico are part of the (renewed) NAFTA, the European Union is a contractor of CETA, Japan, as a country in the Pacific area, has recently signed the TPP-11 with Canada, while it is being explored a free trade agreement with China.

 

These are the total values and the rate of growth for two different biennium (2014-2016; 2016-2018).

TRADE

PARTNER

 TOTAL VALUE 1ST SEMESTER

($ mld CAD)

RATE OF GROWTH (%)

2014

2016

2018

2014/2016

2016/2018

IMPORT

United States

171,582

180,582

194,707

5

8

EU

24,449

25,909

31,338

6

21

China

17,705

18,756

22,758

6

22

Mexico

8,190

9,389

10,605

15

13

Japan

4,603

5,534

6,858

20

24

Total merchandise

258,377

272,290

302,098

5

11

EXPORT

United States

199,602

192,405

213,602

-4

11

EU

18,881

19,718

22,541

4

14

China

10,211

10,773

12,978

5

20

Mexico

3,278

4,254

4,783

30

12

Japan

5,507

5,259

6,549

-4

24

Total merchandise

262,117

253,954

288,178

-3

13

Table1. Source: Statistics Canada. Table  12-10-0011-01 International merchandise trade for all countries and by Principal Trading Partners (x 1,000,000).

 

Graph 1: Canada/world import rate of growth (%) for biennials 14/16 and 16/18. Processing 09.18.

 

Graph 2: Canada/world export rate of growth (%) for biennials 14/16 and 16/18. Processing 09.18.

 

 

2. TRADE IN GOODS CANADA AND INTRA-EU

 

The total value of Canada’s imports from the European Union stands at $ 31,338 in the first half of 2018 and its main European partners, in order of value, are: Germany $ 8,382, United Kingdom $ 3,993, Italy $ 3,312, Belgium $ 3,052, Netherlands $ 2,911, France $ 2,492 and Spain $ 1,277.

 

Italy, in the first 6 months of 2018, reports the third best European average value, with a percentage change of + 18% in 2018 compared to 2016.

 

The total value of Canada’s exports to the European Union stands at $ 22,541 in the first half of 2018 and the main European recipients, ever reported in order of value, are: United Kingdom $ 8,648, Germany $ 2,532, Netherlands $ 2,299, Belgium $ 1,866, France $ 1,736, Italy $ 1,513 and Spain $ 1,067.

 

In the Canadian export, Italy currently occupies the sixth position at the European level with a variation of about + 17% in 2018 compared to 2016.

 

Italy, in the two-year preparation and executive launch of CETA, has recorded a growth in both imports and exports with Canada, although in the first case it is in the top 3 and thus confirms its position as one of the first choices in Canadian demand, while it is not among the first recipients of Canadian goods since 2016, as a result of the drastic reduction of imports of Canadian wheat in Italy, which went from $ 446 million CAD in 2015 to $ 173 million CAD in 2017 (also down in the 1st two months 2018, $ 126 million CAD).

TRADE

PARTNER

TOTAL VALUE 1ST SEMESTER ($ mld CAD)

RATE OF GROWTH (%)

2014

2016

2018

2014/2016

2016/2018

IMPORT

Germany

6,568

7,269

8,328

10,7

14,6

UK

3,825

3,699

3,993

-3,3

8

Italy

2,334

2,807

3,312

20

18

Belgium

1,741

1,587

3,052

-9

92

Netherlands

2,208

2,200

2,911

-0,5

32,5

France

2,192

2,259

2,492

3

10,4

Spain

0,956

1,108

1,277

15,9

15,2

EU

24,449

25,909

31,338

6

21

EXPORT

UK

6,760

8,255

8,684

22

5

Germany

1,696

2,022

2,532

19,2

25,2

Netherlands

1,743

1,449

2,299

-17

59

Belgium

1,818

1,620

1,866

-10,9

15,2

France

1,671

1,663

1,736

-0,5

4,4

Italy

2,322

1,289

1,513

-44,5

17,4

Spain

0,532

0,882

1,067

65

21,3

EU

18,881

19,718

22,541

4,4

14,3

Table 2. Source: Statistics Canada. Table  12-10-0011-01 International merchandise trade for all countries and by Principal Trading Partners (x 1,000,000).

 

Graph 3: Canada/EU import rate of growth (%) for biennals 14/16 and 16/18. Processing 09.18.

 

 

Graph 4: Canada/EU export rate of growth (%) for biennals 14/16 and 16/18. Processing 09.18..18.

 

 

3. THE COMMODITIES SECTORS WHICH INTEREST THE EXCHANGE BETWEEN CANADA AND ITALY

 

Below, we will analyze the Canada-Italy trade according to the type of goods exchanged between the two partners, using as reference the HS2 (Harmonized System) goods classification system.

 

  1. 3.1. ITALIAN EXPORT TOWARDS CANADA BY PRODUCT TYPE

Canada has always represented an important market for Italian goods. With CETA, the trade balance between the two countries has grown in volume and has remained favorable to Italy; our exports gained points, both facilitated by the measures of the agreement that allowed the entry into Canada of agricultural and food products that before the CETA could not be sold in Canada, both following the abolition of duties and as a consequence of the facilities introduced for product certification practices.

 

To see more clearly which are specifically the Italian production goods destined for the Canadian market, we have separated the main types of goods from the total of the direct product categories in Canada (about 90) – data referring to the first half of 2014, 2016 and 2018: we show, in table 3, the list of the top 10, for a market share that exceeds, in the first half of 2018, 60% of the total.

 

 

HS2 CODE

PRODUCT

EXPORT TOTAL VALUE 1ST SEMESTER (€ MLN)

QUOTE (%)

2016

2017

2018

2017

2018

84

Machines and parts, reactors

385.638.339

466.726.443

451.289.021

24,48

23,67

22

Drinks, alcohol and vinegars

167.254.552

187.139.219

185.694.782

9,81

9,74

87

Cars and parts cars

120.435.081

170.553.263

134.456.503

8,94

7,05

94

Furniture / Furnishings

67.570.817

75.506.709

75.616.813

3,96

3,97

30

Pharmaceutical products

80.972.734

59.200.609

70.629.177

3,10

3,70

62

Clothing

52.155.676

63.121.705

67.425.019

3,31

3,54

85

Electric cars

62.599.026

67.194.635

66.316.584

3,52

3,48

69

Ceramic products

59.262.505

66.860.856

63.826.604

3,51

3,35

64

Footwear

56.732.688

49.911.846

58.514.721

2,62

3,07

15

Fats and oils

53.712.289

42.817.641

49.863.723

2,25

2,61

SUBTOTAL

1.106.333.707

1.249.032.926

1.223.632.947

65,5

64,18

Others

664.156.658

657.884.039

720.706.532

34,5

35,82

TOTAL

1.770.490.365

1.906.916.965

1.944.339.479

100

100

Table 3. Source: ISTAT.

The graph below (graph 5) shows that the categories of Italian products headed for Canada mainly belong to the engineering industry.

Italian exports, in the world and in Canada, owes much to the agri-food sector, but the North American country seems to be very attracted to other categories of goods, such as machinery and parts, vehicles and parts, electric machines, pharmaceuticals, furniture and furnishings, and of course the food that, despite its great importance, does not seem to be the main export item.

 

Graph 5: quotas (%) of the top 10 product categories exported to Canada. Processing 09.18.

 

 

  1. 3.2. ITALIAN IMPORT FROM CANADA BY PRODUCT TYPE

From the numbers relating to the sectors most affected by exports from Canada to Italy, it is identified how CETA has influenced not only the quantity, but also the quality of the products imported into Italy. For this reason and to provide an objective interpretation of the data, we report the list of Canadian goods most present in our market (table 4) – the top 10 for market share – which represent 77.4% of the total imported in 1st half of 2018.

 

HS2 CODE

PRODUCT

IMPORT TOTAL VALUE 1ST SEMESTER (€ MLN)

QUOTE (%)

2016

2017

2018

2017

2018

27

Mineral fuels fossil

52.319.580

226.772.565

188.642.277

27,9

24,5

84

Machines and parts, reactors

93.131.218

111.944.195

130.613.078

13,8

16,9

12

Seeds and oily fruits

41.065.470

42.134.428

78.526.333

5,2

10,2

90

Optical instruments, doctors, parts

31.477.324

32.173.020

33.868.492

4,0

4,4

71

Precious metal stones

52.371.742

22.246.038

32.315.527

2,7

4,2

10

Cereals

203.373.339

109.267.038

31.247.790

13,4

4,1

88

Air or space navigation

39.496.613

38.495.399

30.922.230

4,7

4,0

85

Electric cars

31.028.688

26.801.297

26.680.293

3,3

3,5

7

Legumes vegetables

21.399.340

24.108.740

22.395.721

3,0

2,9

76

Aluminum and aluminum works

1.045.643

4.259.685

20.657.436

0,5

2,7

SUBTOTAL

566.708.957

638.202.405

595.869.177

78,5

77,4

Others

184.503.829

175.762.673

175.424.400

21,5

22,6

TOTAL

751.212.786

813.965.078

771.293.577

100

100

Table 4. Source: ISTAT.

Comparing the 2017 and 2018 data (Graph 6), there is a substantial coincidence of the type of products imported from Canada without major changes compared to the period prior to the provisional execution of CETA, with the exception of cereals, sixth in terms of market share fell to 4.1% in 2018 compared to 13.4% in 2017. This shows that, despite the CETA’s entry into force, the importation of cereals from Canada has significantly decreased and that therefore “the wheat question”, imputed to CETA, has been misinterpreted, since the variation occurred was not caused by the agreement, with respect to which it was completely independent. The Italian demand for Canadian goods is focused on the mineral sector, on whose resources Canada bases much of its economy.

Graph 6: shares (%) of the top 10 categories of goods imported from Canada. Processing 09.18

 

 

 

FINAL COMMENTS

 

The analysis of the data shows how the economic agreement CETA does not affect the type and quality of the goods being traded (if not for the benefit of Italy for the protected food products like GI which can now enter the Canadian market unlike what happened before CETA, when they were excluded), but rather on quantities, shedding light on the advantages that Italian productions, in a broad sense, are benefiting from.

Moreover, as already underlined by the Centro Studi Italia Canada, a free trade agreement does not oblige contractors to purchase each other’s goods (the example of wheat is proof of this), but to facilitate exchanges.

The market and its rules remain sovereign and, if the goods produced by one of the contractors, for whatever reason and within the limits of proper competition, will not be considered attractive and appreciated by the other contractor, it will not be a free trade agreement to upset the law of supply and demand.

 

 

*Equity Partner od Nctm Law Firm,

Vice President ICCCW,

Director of Centro Studi Italia-Canada

 

*Research coordination and Public Relations at Centro Studi Italia-Canada

 

*Researcher at Centro Studi Italia-Canada

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