Canada WT/TPR/S/246 
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I. ECONOMIC ENVIRONMENT 
(1) MAIN FEATURES OF THE ECONOMY  
1. Canada is rich in natural resources, including timber, oil, gas, minerals, and ores.  Economic 
activity is relatively diversified, with the GDP share of services on an upward trend and that of 
manufacturing on a downward path (Table I.1).  Desp ite their comparatively modest contributions to 
GDP, agriculture and mining remain important driv ers of Canadian exports.  Canada's economy is 
outward oriented, with aggregate two-way comme rcial flows representing about 60% of GDP even 
amid the recent global recession.  The United Stat es accounts for a considerable share of Canada's 
trade in goods and services. 
Table I.1 
Selected macroeconom ic indicators, 2005-10 
 2005 2006 2007 2008 2009 2010 
Miscellaneous       
Population growth (%) 0.95 1.03 1.09 1.17 1.21 1.15 
GDP at market prices (Can$ billion, current prices)a 1,373.8 1,450.4 1,529.6 1,599.6 1,527.3 1,621.5 
GDP per capita (Can$, current prices) 42,606 44,524 46,450 48,013 45,292 47,540 
Real GDP (% change) 3.0 2.8 2.2 0.5 -2.5 3.1 
Employment (% change) 1.3 1.8 2.4 1.7 -1.6 1.4 
Unemployment rate (% of labour force) 6.8 6.3 6.0 6.2 8.3 8.0 
Business sector labour productivity (% change) 2.4 1.2 0.0 -0.9 0.3 ..  
Sectoral distribution of GDPb (%) 
Agriculture, forestry, fishing, and hunting 2.5 2.3 2.3 2.3 2.2 ..  
Mining, oil and gas extraction 4.8 4.8 4.7 4.6 4.3 ..  
  of which:  oil and gas extraction 3.5 3.5 3.5 3.3 3.3 ..  
Manufacturing sector 16.2 15.6 14.9 13.9 12.7 ..  
Services 74.0 74.8 75.5 76.7 78.4 ..  
  Construction industries 5.8 5.8 5.9 6.2 5.8 ..  
  Wholesale and retail trade 11.1 11.4 11.6 11.7 11.7 ..  
  Transport and warehousing 4.8 4.8 4.7 4.7 4.7 ..  
  Finance and insurance 6.1 6.4 6.5 6.6 6.8 ..  
  Real estate and business se rvices 13.1 13.1 13.3 13.4 14.2 ..  
  Other services 33.1 33.3 33.5 34.1 35.3 ..  
Government finance (% of GDP) 
Revenuec 16.2 16.3 15.8 14.6 14.3 .. 
Tax revenuec 13.5 13.7 13.3 12.0 11.8 .. 
Expenditurec 12.8 13.0 13.0 13.0 16.0 ..  
Federal fiscal balancec 1.0 0.9 0.6 -0.4 -3.6 .. 
Provincial fiscal balance (aggregate)c 1.0 1.1 0.7 -0.1 -1.8 .. 
Federal debt (Can$ billion)  481.5 467.3 457.6 463.7 519.1 564.5 
General government gross external debt (Can$ billion) 161.2 167. 9 145.3 172.7 215.5 266.9 
National accounts (% change) 
Personal expenditure on consumer goods and services 3.8 4.5 4.9 3.2 0.4 ..  
Government expenditure on goods and services 1.5 3.1 2.8 4.0 3.5 ..  
Government gross fixed capital formation 11.8 7.3 7.0 5.8 13.0 ..  
Government investment in inve ntories 20.0 -237.5 142.4 78.6 -108.0 ..  
Business gross fixed capital formation 9.7 8.0 3.5 0.9 -16.4 ..  
Table I.1 (cont'd)WT/TPR/S/246 Trade Policy Review 
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 2005 2006 2007 2008 2009 2010 
Business investment in invent ories 92.0 -21.5 -12.5 -80.3 -762.0 ..  
Exports of goods and services 2.1 0.6 1.3 -6.7 -15.3 ..  
Imports of goods and services 7.4 5.6 6.2 0.7 -15.1 ..  
Monetary aggregatesd (% change) 
M1+ 6.9 8.2 9.0 9.0 13.2 11.8 
M1++ 7.6 7.6 9.1 9.8 17.6 13.0 
Prices and interest rates (end of period) 
CPI (% change) 2.2 2 2.2 2.3 0.3 1.8 
Core CPIe (% change) 1.6 1.9 2.1 1.7 1.8 1.7 
Overnight rate (policy instrument) (%) 2.7 4.0 4.3 3.0 0.4 0.6 
90-day commercial paper (%) 2.8 4.2 4.6 3.2 0.6 0.8 
Exchange rate (Annual average) 
Canadian dollar effective ex change rate index (CERI)f 101.0 107.9 113.2 112.5 106.1 116.9 
Real effective exchange rate (consumer  prices, 2005=100) 100.0 105.3 105.8 100.7 96.8 ..  
Real effective exchange rate (unit la bour cost, 2005=100) 100.0 107.9 114.4 116.0 109.2 ..  
Can$ per US$ 1.21 1.13 1.07 1.07 1.14 ..  
Memorandum   
Current account balance (% of GDP) 1.9 1.4 0.8 0.4 -2.8 -3.1  
Federal debt (% of GDP) 35.0 32.2 29.9 29.0 34.0 34.0 
General government external debt/XGS (%) 31.9 31.3 28.9 28.5 46.7 56.2  
Gross official reserves (Can$ billion) 38.0 41.0 40.6 51.4 56.0 ..  
Gross official reserves (months of imports) 1.0 1.0 1.0 1.1 1.4 ..  
Trade in goods and services (% of GDP) 71.9 69.8 68.0 69.0 59.1 60.7 
Terms of trade (Laspeyres price index) 113.4 113.9 117.4 119.6 109.4 114.4 
 
.. Not available. 
 
a Seasonally adjusted, annual average GDP values. b North American Industry Classification System (NAICS),  2002;  shares are based on GDP in chained 2002 dollars. 
c Fiscal year ends on 31 March. 
d M1+ is currency outside banks plus personal cheque accounts plus current accounts plus some adjustments to M1;  M1++ is 
 M1+ plus non-chequable notice deposits held at chartered ba nks, trust and mortgage loan companies, and credit unions/caisses 
 populaires less interbank non-chequable notice deposits plus continuity adjustments. 
e Excluding eight most volatile items and indirect taxes. 
f The Canadian-dollar effective exchange rate  index (CERI) is a weighted average of bilateral exchange rates for the Canadian 
 dollar against the U.S. dollar, the euro, the Japanese yen, th e U.K. pound, the Chinese yuan, and the Mexican peso.  The CERI 
 replaced the C-6 index in October 2006. 
 
Source:  Statistics Canada;  IMF, World Economic Outlook , October 2010;  Bank of Cana da, "Banking and Financial 
 Statistics", December 2010, and ot her online information.  Viewed at:  http://www.bankofcanada.ca/en/ 
 graphs/a1-table.htm, and http://www.bank-banque-canada.ca /pdf/wfs.pdf;  Department of Finance (2006), Fiscal 
 Reference Tables.  Viewed at:  http:// www.fin.gc.ca/frt-trf/2010/frt-trf-10-eng.asp. 
2. Despite the progress made by Canada since its last review, internal barriers to the 
establishment of a single domestic market remain (Chapter II(1)).  Canada has yet to streamline 
certain federal and sub-federa l regulatory regimes, including those governing environmental 
assessments and securities markets, and to complete the harmonizati on of consumption and corporate 
taxes.  Moreover, a number of industries re main sheltered from Canadian competition law 
(Chapter III(4)(iv)). Canada WT/TPR/S/246 
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3. Canada still lags behind other a dvanced economies in terms of productivity, mainly due to its 
insufficient capital deepening and lacklustre innovation performance.1  The Canadian authorities are 
aware of this issue and have been implementing a range of measures aimed at creating a more dynamic business environment. 
(2) E
CONOMIC DEVELOPMENTS  
4. The Canadian economy expanded through 2007, but succumbed to the impact of the global 
crisis and contracted between the 4th quarter of 2008 and mid-2009, as external demand waned.  
Nevertheless, Canada's strong macr oeconomic fundamentals, coupled with a large stimulus package2 
under the Economic Action Plan (Chart I.1), have en abled it to weather the global recession relatively 
well, outperforming its G-7 peers on the path to recove ry.  It has refrained from enhancing the level of 
protection of its domestic production. 
Chart I.1
Canada's Economic Action Plan, 2009/10-2010/11
Source:   WTO Secretariat, based on information provided by the Canadian authorities.Tax relief
10%
Infrastructure 
investments
37%Suppport for R&D
10%Assistance to 
the unemployed
14%
Support for 
industries & 
communities
30%
Total commitment: Can$60.4 billion over 2 years 
(excluding Can$200 billion to Canada’s financial system)
 
5. By June 2010, Canada had vi rtually recovered the losses in real output and employment 
experienced during the recession (Table I.1).  Real ou tput and employment have  continued to expand 
since then, however the recovery remains fragile .  Although the unemployment rate has declined 
somewhat, it has not returned to pre-crisis levels.  The Government extended, to 31 October 2011, the 
                                                      
1 Canadian expenditure on research and development has not kept apace with economic growth;  its 
share of GDP declined from 2.1% in 2004 to 1.8% in 2008, falling short of the G-7 level (2.2%) for that year.  
Canada's track record was particularly  poor with respect to patent filings  and incentives for private-sector 
investment in innovative activities (OECD, 2009). 
2 According to IMF estimates, at about 4% of Canada's 2009 GDP, combined federal and provincial 
stimulus funding for the years 2009 and 2010 is one of the largest among advanced economies.  The assessment 
takes into account phased-in measures announced in the 2007 Economic Statement and commitments under the 
2009 Economic Action Plan, but excludes support to the automobile industry of around 0.9% of GDP (IMF, 2010). WT/TPR/S/246 Trade Policy Review 
Page 4 
 
 
completion deadline of four infrastructure programme s (under the Economic Action Plan) that were at 
risk of not being completed on 31 March 2011.  Th is also extends construction activity and the 
associated economic benefits through to the autumn of  2011.  While Canada's targeted response to the 
crisis has prevented a sharp contraction in hou sehold spending, public expenditure was the only 
component of aggregate demand that grew stead ily throughout the review period (Table I.1). 
6. The latest Bank of Canada and IMF estimates  converge on 3% GDP growth in 2010, which 
would slow to around 2.3% in 2011;  no major inflati onary pressures are expected in the near term.  
External demand, particularly in the United States, is likely to be the key determinant of Canada's 
short-term growth prospects, as domestic growth in consumption spending weakens with the 
imminent phasing out of temporary stimulus measure s.  In response to its competitiveness challenges, 
Canada stays the course of its long-term economic plan, Advantage Canada, in cluding its international 
component aimed at increasing Canadian particip ation in global value chains (Chapter II(1)). 
7. Canada posted a deficit in the current account of  the balance of paymen ts in 2009, contrasting 
with the surpluses recorded in 200 6-08, but in line with their steady narrowing (Table I.2).  The 
surplus decreased from some 1.4% of GDP in 2006 to 0.4% in 2008;  continued deterioration resulted 
in a deficit of 2.8% in 2009 and 3.1% in 2010.  While the trade-in-goods balance mirrored that trend, 
showing a deficit only in 2009 and 2010, the services balance was in deficit throughout the review 
period.  The financial account balance improved st eadily and even crossed into surplus in 2009 and 
2010, as growing confidence in Canada's stable fi nancial system triggered a surge in portfolio 
investment inflows.  The capital account continued to post a surplus in 2006-09. 
8. Canada maintains a freely floating exchange ra te system with no restrictions on currency 
conversion and transfers for current international transactions.  Save for a brief depreciation during 
the crisis, the Canadian dollar remained strong th roughout the review period, both against the U.S. 
dollar and in real effective terms (Table I.1).  Although recent IMF estimates do not point to a significant overvaluation
3, the national currency's persistent st rength has restrained growth, exposing 
Canada's poor productivity performance.  The Bank of Canada has not sought to influence the 
exchange rate;  under its statute, an intervention may only occur for security reasons, or to maintain 
orderly conditions in the exchange market.  Duri ng the review period, it has continued to conduct 
monetary policy, primarily by adjusting the overnight interest rate, with a view to stabilizing inflation 
at around 2%, with expectations we ll within the 1-3% control range. 
Table I.2 
Canada's balance of international payments, 2005-10 
(Can$ million) 
 2005 2006 2007 2008 2009 2010 
Current account balance 25,902 20,491 12,772 6,918 -43,524 -49,976
  Balance on goods, services and income 27,400 21,951 14,779 7,503 -41,376 -47,538
    Balance on goods and services 50,317 35,472 28,648 23,924 -27,231 -31,875
      Merchandise trade balance 62,372 49,607 47,437 46,243 -4,568 -8,567
         Exports 450,210 453,952 463,120 489,995 369,529 404,543
         Imports 387,838 404,345 415,683 443,752 374,097 413,110
      Balance on services -12,055 -14,135 -18,789 -22,319 -22,663 -23,308
         Credit 67,599 68,386 69,804 72,113 67,144 70,090
         Debit 79,654 82,521 88,593 94,432 89,807 93,398
           Transportation (net) -5,760 -6,647 -7,957 -10,085 -9,537 -10,128
           Travel (net) -5,191 -6,858 -9,933 -12,085 -12,172 -14,119
           Other services (net) -1,104 -629 -901 -149 -954 938
Table I.2 (cont'd)
                                                      
3 IMF (2010). Canada WT/TPR/S/246 
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 2005 2006 2007 2008 2009 2010 
    Balance on investment income -22,917 -13,521 -13,869 -16,421 -14,145 -15,663
      Credit 49,768 66,528 76,931 71,881 57,378 61,430
      Debit 72,685 80,049 90,800 88,302 71,523 77,093
  Balance on current transfers -1,498 -1,460 -2,007 -585 -2,148 -2,438
    Credit 8,035 9,563 9,497 10,574 8,622 8,715
    Debit 9,533 11,023 11,504 11,159 10,770 11,153
Balance on capital account 5,905 4,201 4,233 4,650 3,968 4,752
   Credit 6,612 4,903 4,996 5,397 5,249 5,452
   Debit -707 -702 -763 -747 -1,281 -700
Balance on financial accounta -29,255 -26,970 -18,907 -7,073 39,960 50,795
   Direct investment abroad -33,370 -52,423 -62,003 -86,214 -44,389 -38,016
   Direct investment in Canada 31,132 68,395 123,148 58,975 21,327 22,477
   Portfolio investment abroad -53,455 -78,668 -48,426 13,653 -8,667 -12,783
   Portfolio investment in Canada 13,136 31,089 -31,096 29,797 110,865 116,239
   Other investment (net) 13,302 4,637 -530 -23,284 -39,176 -37,122
Net errors and omissions -2,552 2,278 1,902 -4,495 -404 -5,571
 
a A minus sign denotes an outflow of cap ital resulting from an increase in claims on non-residents or a decrease in liabilities  to 
 non-residents. 
 
Source:  Statistics Canada online information.  Viewed at:  http://www40.statcan.gc.ca/l01/cst01/econ01a-eng.htm;  and 
 http://www40.statcan.gc.ca/l01/cst 01/econ01b-eng.htm?sdi=capital%20account. 
9. Canada's prudent fiscal policy continued to tr anslate into federal budget surpluses through 
FY2007/08;  by and large, fiscal discipline was also  maintained at the provincial level, with a 
combined surplus (after debt repayments) followi ng closely the federal trend (Table I.1).  The 
economic downturn, coupled with Ca nada's substantial stimulus res ponse, triggered deficits in both 
the federal and the overall sub-federal fiscal balances in the following fiscal year.4  Federal debt has 
been on the rise since 2008;  nevertheless, at about 34% of GDP in 2009/10, it remains low by 
international comparison. 
10. Canada has made progress in reforming its tax base with a view to easing the burden on 
individuals, families, and businesses (Table I.3).  Ta x relief measures implemented at the federal level 
since 2006, including those under the Economic Ac tion Plan, are valued at Can$220 billion over 
2008/09-2013/14;  approximately 70% would benefit Canadian families and individuals, while the 
remaining 30% would ease the financial pressure on businesses.5  Business tax reductions since 2000 
have not eliminated the preferential treatment  of Canadian-controlled private corporations 
(Chapter III(4)(1)). 
11. According to the authorities, the implementa tion of federal and provincial tax reform 
commitments made since 2006 would nearly halve Ca nada's marginal effective tax rate (from 33% to 
16.8%) on new business investment by 2012;  significan t variations would remain across provinces 
(Chart I.2).  The provinces of Manitoba, Saskatch ewan, and Prince Edward Island continue to levy 
retail sales taxes that are not harmonized with the federal Goods and Services Tax. 
  
                                                     
 
4 The federal deficit is projected to narrow signifi cantly (to Can$17.5 billion) in 2012/13, as temporary 
measures under the Economic Action Plan expire. 
5 Government of Canada (2010). WT/TPR/S/246 Trade Policy Review 
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Table I.3 
Major measures affecting Canada's tax base, 2006-10  
Action Entry into force Expiry 
Individuals and families   
Lowered the Goods and Services Tax (GST) rate by 2 percentage points, while keeping the GST 
Credit unchanged July 2006 n.a.  
Introduced a general-purpose Tax-Free Savings Account 2008 n.a.  
Increased the tax credit for low-income seniors by Can$1,000 2009 ..  
Introduced a temporary Home Renovation Tax Credit;  about 4.6 million Canadi an families benefited 
from up to Can$1,350 in tax relief 2009 .  
Reduced the lowest personal income tax rate from 16% to 15% ..  n.a. 
Raised the minimum threshold for federal income tax and the upper bounds of the two lowest income 
tax brackets .. .. 
Doubled the Working Income Tax Benefit (originally introduced in 2007) ..  .. 
Raised maximum income thresholds under the Nati onal Child Benefit supplement for low-income 
families and the Canada Child Tax Benefit .. .. 
Introduced a tax credit of up to Can$750 and great er flexibility in drawing upon savings under a 
Registered Retirement Savings Plan for first-time home buyers .. .. 
Businesses   
Eliminated the federal capital tax 2006 n.a.  
Renew the temporary Mineral Exploration Tax Credit (2006, 2007, 2008, 2009, 2010) May 2006 March 2011 
Expanded eligible assets for accelerated capital cost  allowance for clean energy generation equipment 
(Class 43.2) (2006, 2007, 2008, 2010) Various December 
2019 
Introduced and extend a 50% straight-line, accelerated  capital cost allowance rate for investments in 
manufacturing or processing machinery and equipment (2007, 2008 and 2009) 2007 2012 
Increased the amount of income e ligible for the lower tax rate app lied to Canadian-controlled private 
corporations (from Can$300,000 to Can$400,000 in 2007 and Can$500,000 in 2009) 2007 n.a.  
Provided a temporary financial incentive to provinces  to eliminate their general capital taxes and to 
eliminate or replace their capital taxes on financial institutions with a minimum tax.  All provincial 
general capital taxes will be eliminated by 2012. 2007 2010  
Phased out accelerated cap ital cost allowance for oil sands projects 2007 n.a.  
Adjust capital cost allowance rates for a number of a ssets to better reflect their useful life 2007, 2008 n.a.  
Gradually lower the federal general corporate income  tax rate from 21% in 2006 to 15% in 2012 2008 n.a.  
Reduce the small business tax rate applied to  Canadian-controlled private corporations 
from 12% to 11% 2008 n.a.  
Eliminate the corporate surtax for all corporations 2008 n.a.  
Introduce a 100% capital cost allowance rate for purchased computers February 2009 February 2010
 
.. Not available. n.a. Not applicable. 
 
Source:  WTO Secretariat, based on information provided by the Canadian authorities. 
12. Overall, the Canadian Government remains determined to balan ce the federal budget by 
FY2015/16 with a view to reducing Canada's (still moderate) debt-to-GDP ratio.  Measures to curb 
spending growth focus on, inter alia , containing national defence outlays, capping international 
assistance, and freezing operational budgets in the pub lic administration.  A return to balanced 
budgets over the medium term, albeit at different p aces, is also planned at the sub-federal level.  
Canada's modest imbalances, coupled with a str ong track record in ensuring fiscal prudence, should 
enable it to prepare for the long -run budgetary impact of population ageing and escalating health-care 
outlays. 
13. Recently initiated tax reforms and infrastru cture upgrades are expected to improve the 
business environment.  Nevertheless, economic perfo rmance would continue to be undermined by 
domestic market fragmentation.  For example, al though its financial system has demonstrated Canada WT/TPR/S/246 
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remarkable stability amid the globa l crisis, Canada is the only OECD country that still lacks a nation-
wide approach to securities regulation Chapter IV(6)(vii)). 
34.0
23.430.039.3
37.8
30.3
14.721.335.1
17.616.816.224.226.3
17.9
13.8
1.711.927.8
9.0
051015202530354045
British
ColombiaAlberta Saskatchewan Manitoba Ontario Quebec New
BrunswickNova Scotia Prince Edward
IslandNewfoundland
& LabradorChart I.2
Canadian provinces' tax rates on new business investment, 2006-12 a
Source:   WTO Secretariat, based on information provided by the Canadian authorities.2012 2006
a   Change in the marginal effective tax rate upon implementation of federal and provincial commitments made between 2006 and
     January 2011 (excludes resources and financial sectors and tax provisions related to research and development).
 
(3) TRADE AND INVESTMENT PATTERNS  
14. Between 2006 and 2010 the ratio of total trade in goods and services to GDP decreased from 
69.8% to 60.7%;  a significant portion of the decline can be attributed to the global economic slowdown.  Canada's total merchandise trade grew at a nominal average annual rate of 3.7% between 
2006 and 2008, contracted by 20.4% in 2009 as the global recession deepened, and rebounded by 10% 
in 2010.  Total services trade mirrored that tre nd, although its contraction (5.8%) in 2009 and rebound 
(4.2%) in 2010 were more modest.  Merchandise expor ts grew at an average annual rate of 2.9% in 
2006-08, shrunk by 24.6% (year-on-year) in 2009, and expanded by 9.5% (year-on-year) in 2010.  At 
the same time, merchandise imports expanded faster (4.6%) through 2008, contracted less (15.7%) in 
2009 and had a stronger rebound (10.4%) in the following year.  The corresponding average annual 
growth, and year-on-year contrac tion and recovery figures for services were respectively 2.2%, -6.9% 
and 4.4% (for exports), and 5.8%, -4.9% and 4.0% (for imports). 
15. In 2010, Canadian merchandise exports were shor t of their 2006 value by 9.5%, having fallen 
by some 18.3% of that amount in the preceding year ;  all major product groups were affected.  The 
composition of exports has not changed significantly since Canada's last Review, as the global economic downturn triggered a reversal of several emerging trends.  Fuels accounted for some 28% of 
total exports in 2008, up from 20% in 2006;  However, by 2009 their share was closer to the 2006 
level (Table AI.1).  By and large, the value of  fuel exports mirrored world price developments, WT/TPR/S/246 Trade Policy Review 
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although volumes, particularly of coal, also regist ered a slight decline before rebounding sharply in 
2010.  Mining products accounted for 35% of total e xports in 2008, before declining, driven by drops 
in both export prices and volumes;  nevertheless, they remained the most important export category, 
followed by machinery and transport equipment.  The share of manufactures declined from 53% to 
47% of Canada's exports between  2006 and 2008, but rose in 2010;  the improvement was largely 
driven by machinery and equipment exports, notwith standing their decline in absolute terms.  The 
share of agricultural products, which was around 13. 5% of total exports in 2010, up from 10.5% in 
2006. 
16. In 2010, the value of merchandise imports exceeded its 2006 level (Table AI.2) by 1.4%, fully 
recovering the 8% drop experienced in 2009 relative to  the beginning of the review period.  Although 
the share of manufactures has fluctuated somewhat, it still accounted for some 75% of Canada's total 
imports in 2010.  Likewise, notwithstanding some eb b and flow in 2006-10, at 41.1% of total imports, 
machinery and transport equipment remained the most  important category.  The share of agricultural 
imports expanded gradually during th at period, reaching 8.2%.  The shares of fuel and mining imports 
were driven by the same price fluctuations as th e respective shares of total exports, and followed a 
similar pattern. 
17. Bilateral merchandise flows betwee n Canada and most of its major trading partners increased 
in nominal terms during 2006-08, but dropped sharply in 2009 and, in most cases, did not fully recover in 2010.  Commercial exchanges with the Un ited States registered the largest contractions, in 
both directions, whereas those with China expanded the most.  Exports to India, Turkey, and the 
United Arab Emirates remained we ll above their 2006 levels.  The value of imports from the 
Commonwealth of Independent States, Peru, a nd Switzerland also rose between 2006 and 2010. 
18. The United States remained Canada's main destination and supplier of merchandise 
throughout 2006-10 (Tables AI.3 and AI.4).  Howeve r, its relative weight in aggregate Canadian 
exports decreased by 6.5 percentage points and its share of total imports by 4.5 percentage points.  
During the same period, shipments to China and the EU  continued to intensify, expanding their shares 
of total exports by 1.5 and 2 percentage points resp ectively.  While the comparative importance of the 
EU as a supplier remained stable at around 12%, China's relative weight  in Canadian imports 
increased from 8.7% to 11%. 
19. As at the time of its previous TPR, Canada remains a net importer of services;  the overall 
deficit widened by some 65% over 2006-10, to Can$23 .3 billion.  The main contribution to the 
negative balance was personal travel (Table AI.5).  Having registered deficits in management services 
from 2004 through 2006, Canada posted comparatively mod est surpluses in the four subsequent years.  
It continued to be a net exporter of land tran sport, research and development, communication, 
information technology, architectural, engineering and other technical services. 
20. Canada's services trade has continued to dive rsify away from the United States, albeit at a 
very modest pace.  In 2009, th e United States accounted for 52.7% of Canadian services exports and 
55.6% of imports (Tables AI.6 and AI.7).  The EU  has maintained a fairly  stable share in both 
aggregate exports and imports and while the relative weight of Cent ral and East Asia in Canadian 
services imports remained unchanged, its share of total exports declined somewhat in 2006-08. 
21. Canadian investment abroad outpaced inward fo reign investment in 2006-08;  this trend was 
reversed in 2009, largely as a result of Canada's re markable stability amid th e turbulence in financial 
markets worldwide.  Accordingly, inflows of fore ign capital have shifted from direct to portfolio 
investment and have been predominantly in gove rnment and corporate securities.  Despite certain 
steps towards liberalizing inward foreign direct investment (FDI), the latter remains subject to Canada WT/TPR/S/246 
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notification and review requirements, including for national security reasons (Chapter II);  Canada's 
lower productivity performance relative to the Unite d States may also explain the decline in FDI. 
22. The stock of FDI in Canada to talled some Can$549.4 billion in 2009.6  As at the time of 
Canada's previous review, the largest shares of FDI stock were concentrated in energy and metallic 
minerals (36.2%), and in financial services (19.8%).  In 2006-09, FDI inflows totalled 
Can$271.8 billion;  energy and metallic minerals accounted for some 59.6%, followed by financial 
services (8.1%) and "other services and retailing" (7.9%).7  The United States remains the leading 
investor, accounting for 52.5% of Canadian FDI stock in 2009 and 37.9% of total inflows during the review period.  The respective figures for the second largest source of inward direct investment, the 
EU, were 29.8% and 34.2%, with a considerab le portion of each share attributable to the 
United Kingdom.  Investors from other OECD countries held 5.6% of Canada's stock of FDI in 2009 
and accounted for 5.9% of total inward direct investment in 2006-09. 
23. The United States remains Canada's main outward  FDI destination, with 49.1% of aggregate 
outflows in 2006-09, followed by the EU (16.5%).  These two destinations also accounted for most of 
the stock of Canadian direct investment abroad , accounting for 44% and 25% respectively in 2009.  
While Canadian portfolio investment in foreign bonds declined sharply during the global crisis, 
outward investment in stocks remained strong and predominantly concentrated in the United States. 
                                                     
 
6 Statistics Canada online information.  Viewed at:  http://www.statcan.gc.ca/pub/67-202-x/2010003/ 
t010-eng.htm. 
7 Statistics Canada online information.  Viewed at:  http://www.statcan.gc.ca/pub/67-001-x/2010003/ 
t061-eng.htm.