Paul Young CPA, CGAMarch 26, 2017

Why is Merchandise Trade important to countries?

Paul Young – Bio

CPA, CGA– 26+ years of Corporate Finance and Business Solutions– 17+ years in corporate finance and reporting– 11+ years of analyzing government policies– Blogger – Financial, Economic and Business Trends– 8+ years in academia

Advance Accounting Advance Management Information System Public Finance Advance Finance Audit Risk and Controls

What is Merchandise Trade?

Who are export depended countries?

What is FIPA

Exports / Canada

Agenda

Businesses need to expand into new markets as part of leverage their business operations

Governments need FDI as part of supporting the economy

Capital is required to support development of resources and/or manufactured goods by a business.

Introductory

Merchandise trade only include trade in goods, not services nor capital transfers and foreign investments. Official merchandise trade statistics measure the level, month-over-month and year-over-year changes in total trades, exports and imports. Balance of merchandise trade is equaled to total exports minus general imports. Exports are defined as total exports which include

1. Domestically produced goods

2. Re-exports, that are re-exporting of goods which are imported and warehoused in U.S. General imports constitute of imports for immediate consumption channels and warehouses.

3. Merchandise trade is reported in current U.S. dollars with no inflation adjustments.

What is Merchandise Trade?

Source - http://www.wikinvest.com/wiki/Merchandise_Trade

Top 20 Export Most Dependent CountriesTop 20 Export Least Dependent Countries

Canada ranks #89

Source - https://www.slideshare.net/paulyoungcga/what-is-fipa-foreign-investmnet-proection-act-canada-review

FIPA – Foreign Investment Protection Agreement

• Business want protection in terms of making investment in a country. • Government needs to streamline processes as part of supporting FDI including getting projects off the

ground• Investors have the right to sue government, especially if government is slow when it comes to

approving projects• Business cannot walk into a country without having proper support from their government• FIPA is the first start in terms of trade agreements

Canada and Trade/FIPA Agreements – latest news

Stats Canada

Canada / Exports

• Fact 1 – Canada / Lacks the capacity to export• Pipelines• Rail systems• Port Capacity (inland or waterways)• Roads/Bridges

• Fact 2 – Canada / Wages• Export related jobs pay about 30% higher than the service sector

• Fact 3– Exports / Job creation• For each $1B of exports there are 5,500 jobs

Source – Stats Canada

Canada Trade / ImbalanceComments:• 52% of exports are raw

materials• 48% of exports are

finished goods

Private sector– Continue investment into ports like Prince Rupert, Sydney, Montreal, etc.– Rail upgrades

Liberal Party of Canada plans to spend $125B on infrastructure– Only 10% of the infrastructure goes to export related investments– Liberals approved two pipelines (pipelines approved under previous government)

Canada infrastructure investment

Lack of Trade deals– No FIPA/Trade deals with emerging countries (Southeast Asia, India, Africa, South America and others)

Competitive position– Carbon Tax– Hikes to payroll taxes– Hydro Rates

Global Protectionism– Trump import tax– Tariffs and duties– Subsidies

Merchandise Trade issues / Canada

https://www.slideshare.net/paulyoungcga/why-is-merchandise-trade-important-to-canada

https://www.slideshare.net/paulyoungcga/what-is-ceta-comprehensive-economic-and-trade-and-what-does-it-mean-for-canada

https://www.slideshare.net/paulyoungcga/nafta-issues-at-hand-for-canada-mexico-and-united-states

https://www.slideshare.net/paulyoungcga/nafta-commentary-and-analysis-november-19-2016

Additional Sources