This presentation looks at merchandise trade including issues facing business as they expand to new markets.

1. Paul Young CPA, CGA
March 26, 2017
Why is Merchandise Trade
important to countries?

2. 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

3.  What is Merchandise Trade?
 Who are export depended countries?
 What is FIPA
 Exports / Canada
Agenda

4.  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

5.  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

6. Top 20 Export Most Dependent Countries
Top 20 Export Least Dependent Countries
Canada ranks #89

7. 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

8. Canada and Trade/FIPA Agreements – latest news

9.  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

10.  Source – Stats Canada
Canada Trade / Imbalance
Comments:
• 52% of exports are raw
materials
• 48% of exports are
finished goods

11.  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

12.  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

13.  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