Schoolchildren grow up in Canada with two comforting sureties about our big American cousins to the south.
We share the longest undefended border with the United States. And Americans have always been Canada's No. 1 customer for our products and services.
We've got, like, a special relationship, eh?
Well, time to rewrite the textbooks.
The world's longest undefended border pretty much evaporated after 9/11, when Americans started thinking the terrorists came from here. We now have tighter security, even military drones above the border, slowing down trade and travel into the United States.
Now it seems we're no longer America's favoured trading partner, either.
For years, Canada and China have battled it out for top spot with the world's biggest economy. The latest trade figures, now posted on the website of the U.S. Department of Commerce, show China has finally built a massive lead. In the first eight months of this year, Americans bought $142 billion of Canadian exports and $185 billion of goods from China.
We're No. 2. Get used to it.
This development is partially because of the recession. The North American automobile industry has taken a drubbing, hurting our exports to the United States. Oil and natural gas prices have also fallen dramatically, cutting the amount of energy imports. And our soaring loonie is killing us, too.
As the Canadian dollar rises against the American greenback, our exports become expensive and less competitive. China, which pegs its currency to the U.S. dollar, has no such trouble. As the U.S. dollar falls, its exports become cheaper while Canada's become more costly.
The reflex of many Canadians is to put this down to a temporary disruption in the U.S.-Canada trading relationship. The conventional wisdom is that when the U.S. economy picks up, demand for Canada's autos, lumber, oil and natural gas will lift, too.
But the reality is the new trade numbers show we're at a watershed moment.
"It's not a blip; this is a trend," says Jock Finlayson, the senior economist and executive vice-president at the B.C. Business Council. "These numbers are another signal of China's dramatic rise in the global economy."
Billionaire Jimmy Pattison, who noticed the dramatic shift in the trade figures a few months ago, says British Columbians and Canadians ought to pay attention to losing their status as the United States' No. 1 exporter. It means we'll have to compete hard for a share of the U.S. market, access to which we've often taken for granted.
Pattison, who is rarely wrong when it comes to anticipating global market shifts, predicts Canada's share will diminish even further once China starts exporting its cars to the United States.
"When the Chinese start selling cars in the U.S., and they will soon, that's when the dollars are really going to start flowing," says Pattison.
Canada isn't up against just China, either. As India and Brazil continue to rise as global exporters, they too will be fierce competitors in the U.S. market. Canada, and by extension British Columbia, are destined to be smaller players south of the border.
It's a sobering moment in Canada's and British Columbia's trade future. But it also might be just what's needed to push Canadians and their political leaders to be a little more aggressive in keeping us competitive in the world's largest economy.
One area that Canada's leaders will need to focus on, says Pattison, is the border. If it continues to "thicken," as it has in recent years after 9/11, it will further hurt Canada's access to the U.S. Canada and British Columbia have to fight the "thickening" trend, says Pattison.
For Vancouver, and British Columbia however, there may actually be a bright spot in Canada's losing its status as America's No. 1 importer to China.
All those Chinese cars and cheap imports are going to push up traffic at North America's west coast ports. That means our provincial and national strategy of building up British Columbia as Canada's Asia Pacific Gateway -- both to attract Asian trade and also send Canadian exports to a resource-hungry Pacific Rim -- turns out to be more than just prudent. It's visionary.
mcernetig@vancouversun.com
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