The North American Free Trade Agreement and the Canada-United States deal before it are being given much of the credit for Alberta’s decade of prosperity.
Agriculture, natural resources and high tech exports to the United States all played major roles in building a robust provincial economy, said a recently released study from the Western Centre for Economic Research.
“Diversity has occurred in Alberta more so than British Columbia or Saskatchewan. Manitoba is already a diversified economy,” said University of Alberta economist Ted Chambers, who led the study.
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“There’s no axe to grind here. This is an evaluation of what has taken place. The free trade agreement has been beneficial to Alberta.”
Other western provinces have also seen improvements, the report said, but not as much as Alberta.
Manitoba shipped more electronics, minerals and agriculture products, including meats, cereals and vegetables.
While Manitoba still relies heavily on primary product sales, new technology is rapidly overtaking agriculture and resource exports. In total, Manitoba exported $7.8 billion worth of goods in 1998, an 11 percent improvement over 1997. The U.S. market received 79 percent of Manitoba’s exports.
The province’s top exports were vehicles and parts followed by machinery, boilers, cereals and oilseeds. However, aircraft and spacecraft exports are closing in on the primary agriculture products. Cereal and oilseed exports were about $500 million compared to aircraft exports of $458 million.
Saskatchewan’s top 20 categories included fertilizer at $2 billion followed by cereals at $1.9 billion and mineral fuels and oils at $1.5 billion.
In 1998, Saskatchewan exports took at hit when commodity prices fell. More than $9.8 billion worth of goods were exported in 1997 compared to $9.1 billion in 1998. Nearly 60 percent of Saskatchewan exports are destined for the U.S.
B.C. is the least dependent on the U.S. market, but ships considerable amounts of minerals and wood products.
Agriculture exports do not figure in the top 20 exports from B.C.
Alberta’s annual exports climbed to $30.7 billion last year, an increase of 136 percent since the 1989 signing of the agreement. Of this amount $25.4 billion came from sales to the United States.
The top export commodities were energy, livestock, electrical components, plastics, chemicals, processed meats, fertilizers, animal fats and vegetable oils.
For every $100 worth of products shipped to foreign countries from Western Canada, $41 originated in Alberta.
Alberta’s best customers are New York and Pacific Northwest states, to which shipments have tripled in the last 10 years.
Washington and Utah absorb more than 40 percent of Alberta’s agricultural shipments. California, New York and Texas are the most important markets for non-energy and non-agricultural merchandise.
Agriculture’s largest growth area is meat products. Exports have risen steadily since 1989 and last year meat exports exceeded $1 billion for the first time.
The report said Alberta is now Western Canada’s meat processing centre.
Beef exports were valued at $788 million in 1997 while pork was nearly $82 million and offal $88 million. The greatest increase has occurred since 1994.
Other agricultural products are also doing well.
Live animal exports were $797 million last year. Cereal exports were worth $1.02 billion while oilseeds and miscellaneous grain exports were $589 million.
The energy industry remains high, with U.S.-bound exports worth $15 billion. Electrical equipment sales were worth $1.5 billion and wood pulp exports totaled $1.9 billion.
Apart from continued dominance of energy products like crude oil, natural gas and coal, the most notable feature is electrical equipment, particularly communications equipment. This has climbed to second place on the export list.
Mexican opportunities
Mexico remains a small market, taking less than one percent of Alberta exports as of 1998.
However, 1999 improvements are evident in oilseeds and dairy products.
Of greater value is the export of communications equipment to Mexico, which contribute 28 percent of Alberta’s exports to Mexico.
The province’s export performance on an employee basis is also higher than the other western provinces. About $20,000 of an Albertan’s wage is attributed to the export market compared to about $16,000 in other provinces.
Free trade has attracted some foreign investment to Canada, with Alberta and Ontario attracting the most.
Wood and paper has seen the highest level of outside ownership in Alberta. The sector now has 35 percent foreign ownership..
The report said concerns over foreign direct investment are largely unfounded and have benefited the country.
While outside investment is welcome, there must be rules in place to protect the domestic industry, the report said. Free trade agreements can form a template for such regulations.
