Canadian Politicians Accuse U.S. Government Of Misleading Facts On Trade Deficit

The political rhetoric between Canada and the United States is growing testy as officials in Ottawa publicly dispute the trade figures being put out by the administration of American President Donald Trump.

U.S. Trade Representative Robert Lighthizer has been talking up the U.S. trade deficit with Canada in recent days – a move seen as justifying the Americans’ tough stance at the negotiating table in the current talks aimed at updating the North American Free Trade Agreement (NAFTA).

"Using Canadian statistics," said Mr. Lighthizer, "Canada has an over $87 billion U.S.-dollar surplus with the United States. To put this in perspective, that figure is equal to approximately 5.7 per cent of Canada's GDP… Now, I ask Canadians, is it not fair for us to wonder whether this imbalance could in part be caused by the rules of NAFTA? Would Canada not ask this same question if the situation were reversed?"

Trade and finance officials in Ottawa are openly and aggressively disputing the trade figures being put forward by Mr. Lighthizer, saying he arrived at his numbers by including goods that pass through Canada but don't originate here as Canadian exports, artificially inflating the United States' trade deficit in goods with Canada.

In a statement, Global Affairs Canada said that the U.S. is “counting the same goods twice.” For example, a Chinese washing machine that passes through the Port of Vancouver on its way to the U.S. is being counted in both the U.S. trade deficit with China and in the U.S. goods deficit with Canada. The volume of pass-through goods being added to real Canadian exports in the U.S. government’s math is about US$75 billion.

"Canada does not consider trade deficits and surpluses to be the ultimate arbiter of whether trade is good or bad," said Canada’s Foreign Affairs Minister Chrystia Freeland. "But it is worth noting than in overall trade in goods and services, Canada had a trade deficit with the United States of nearly US$8 billion… And let me say, these aren't Canadian numbers. They are from the U.S. Bureau of Economic Analysis in the Department of Commerce."

Minister Freeland cited the number for goods and services combined, which produce a relatively small U.S. surplus. For goods only, the U.S. Department of Commerce and the Government of Canada both record a small Canadian surplus. Neither side's numbers come close to those cited by Mr. Lighthizer in recent days.

The website of the U.S. Trade Representative itself cites a much smaller trade deficit figure with Canada than the numbers put forward by Mr. Lighthizer.

“Canada is currently our 2nd largest goods trading partner with $544.0 billion in total (two-way) goods trade during 2016. Goods exports totalled $266.0 billion; goods imports totalled $278.1 billion. The U.S. goods trade deficit with Canada was $12.1 billion in 2016," sates the USTR website.