Canadian Manufacturing

Alberta to diversify trade via China, India

Exporting to Asian markets will require transportation upgrades

EDMONTON—Alberta is shifting its trade focus from the U.S. and making plans to beef up exports to Asian markets.

“One thing the global recession made clear is that Alberta can no longer rely on a single market of 300 million people — not when there are prosperous markets of more than a billion people we have yet to tap,” outgoing Premier Ed Stelmach said in a news release.

Stelmach said Alberta has energy, food and wood fibre products to fuel growing demand in India, China, Japan and Korea.

The province plans to target those nations by setting up an Asia Advisory Council this year that will strategize how best to meet that demand.

Industry elsewhere in Canada would be wise to follow the west’s example and look east for new trade partners, says André Plourde, an economics professor at the University of Alberta.

“The U.S. is still the primary market for Canadian exports but it’s a good strategy for manufacturers to widen their portfolio and get into these larger markets where there’s real opportunity for growth,” Plourde says.

“What really starts to matter now is exchange rates,” Plourde says, adding Canadian exporters will want to watch how China manages its currency.

Strengthening trade links to Asia will also mean upgrading transportation infrastructure, including port capacity on the west coast and direct air service — already a divisive issue in Western Canada.

Despite opposition to increased pipeline and rail activity, some economists say there are huge benefits to diversifying markets for Alberta’s goods, especially oil.

Peter Buchanan, senior economist with CIBC World Markets, says emerging markets are expected to account for 48 per cent of global oil demand, with half of that demand coming solely from China.

While demand in those countries is set to grow by four per cent, it’s expected to decline by a half per cent in developed economies.

Buchanan says it also makes sense to look outside the U.S. for oil exports due to current bottlenecks in crude transportation south of the border that are causing Canadian oil to trade at significant discounts.

A recent report from Scotia Economics pegged the economic loss for Canadian oil producers at more than a billion.

“Improving infrastructure to transport oil to China and other Asian markets is going to be necessary to meet the significant shift in demand going forward,” Buchanan says.

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