Technology has been the great enabler of globalization, but globalization is a human construct and is therefore neither inevitable nor irreversible.
This powerful sentence was extracted from the foreword of the 2013 World Trade Report, published by the World Trade Organization and penned by Pascal Lamy, the organization’s director general.
Along with several other insightful comments, Lamy’s statement sparks further consideration of global trade and Canada’s future.
Growth in world merchandise trade was less than half of the previous year and slightly less than forecast by the WTO.
As a result, countries such as Canada that rely on export trade are no doubt taking note of the slower pace and the tone it sets for future export estimates.
The WTO report clearly states that long-term estimates are extremely sensitive to changes in key assumptions, namely an individual nation’s policy and demographics.
As an example, China’s growth is not expected to increase, but as its population ages, the growing middle class is likely to demand more specialized products.
What does this mean for Canada’s producers? Small growth is still growth, and growth translates into trade opportunity. However, a slowing global economy with less trade will increase competition between developed countries for the share of the shrinking market.
So how do we sharpen our competitive edge?
It is no secret that Canadian producer organizations and governments are working to facilitate more trade, but is there an opportunity to extract more value out of Canadian products?
Creating more value domestically might be a smart strategy in an ever-changing, increasingly competitive global market.
In support of such a notion, the WTO indicates that export values largely depend on value added enterprises. Countries with diverse manufacturing enterprises are able to import raw products, manufacture the raw products into consumer products and re-export the products they imported, thus boosting their economic trade balance more than the country that just exports the raw material.
Thirty percent of total trade consists of re-exports. Surely this indicates that there is an opportunity for Canada to invest in domestic food production infrastructure.
Are the policies in place to capture more value from the high quality agricultural products we produce by turning them into high value consumer products?
If not, such a strategy seems especially relevant now and into the near future as growth in developing countries creates a growing middle class that demands brand specific, healthier food.
Canada’s global reputation for quality raw products should translate well into marketing higher value food to those who demand it.
Although the current global demand for our agricultural commodities is exciting and profitable, it is important to remember that the policies we support today enhance our ability to compete in the future.
What better time to further develop the Canadian brand and expand the strategy for capturing more value within the only border we control and through the only national policy that is accountable to Canadians: our own.
Ross Macdonald, M.Sc., P.Ag., ranches in southern Saskatchewan.